Terrorism Can't Keep the Economy Down
Osama bin Laden said that the Sept. 11, 2001, attacks "struck deep at the heart of America's economy." He was wrong. The U.S. economy was scraped and bruised on that terrible day, but it is clear that the heart of the American economy is still beating strongly.</br></br>Despite an estimated $120 billion of damage and a great deal of anxiety, one year after the attacks an economic recovery is underway. In fact, the three-quarter recession that began in early 2001 ended within 45 days of 9/11, and real GDP has now expanded for three consecutive quarters.</br></br>By early October 2001, consumers and businesses were back up and running. After seeing weak sales in mid-September, automobile manufacturers instituted 0% financing and auto sales soared in October to an annualized rate of 21.3 million units, a record high.</br></br>Other retailers experienced similar results. Excluding autos, retail sales fell 1.2% in September, but rebounded by the same 1.2% in October. To complete the pattern, durable goods new orders fell 6.8% in September, only to rebound 9.2% in October.</br></br>Real GDP fell by less (-0.3%) in the third quarter of 2001, which included the impact of the attacks, than it did in the second quarter (-1.6%), just before the attacks. While the airline and hotel industries are still experiencing a depressed level of activity, other spending has not only recovered, but more than offset travel-related losses.