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The Economic Outlook
What Officials are Saying About the U.S. Economy After Attacks

October 2001 -- The Sept. 11 terrorist attacks sent the already-weak U.S. economy reeling. Officials and economists have generally agreed that while last month's events made the outlook more grim, the economy will recover. The question is when. Here, a range of views from government officials and economic experts.

The Fed

"Heightened uncertainty and concerns about a deterioration in business conditions both here and abroad are damping economic activity. For the foreseeable future, then, the (policy-setting Federal Open Market) Committee continues to believe that, against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness. Although the necessary reallocation of resources to enhance security may restrain advances in productivity for a time, the long-term prospects for productivity growth and the economy remain favorable and should become evident once the unusual forces restraining demand abate." -- Federal Reserve Board statement Nov. 6, 2001, announcing its third half-point interest rate cut since the attacks


"Reports from all Federal Reserve Districts indicate weak economic activity in September and the first weeks of October. In all Districts, the tragedy of September 11 was followed by a short period of sharply reduced activity. Business activity recovered quickly from some aspects of the shock ... but longer-run effects are more difficult to assess." -- Federal Reserve Board "Beige Book" report surveying U.S. economic activity, Oct. 24, 2001.


"The terrorist attacks have significantly heightened uncertainty in an economy that was already weak. Business and household spending, as a consequence, are being further damped. Nonetheless, the long-term prospects for productivity growth and the economy remain favorable and should become evident once the unusual forces restraining demand abate." -- Federal Reserve Board statement Oct. 2, 2001, announcing its second half-point interest rate cut since the attacks



The President

President Bush

President Bush
Photo: Tina Hager, White House



"One of the effects of the attacks has been on our economy. Make no mistake about it: September 11th affected economic growth, and our government must respond in an effective way ... And we've taken enough money -- spending money to make sure we defend our country and accomplish our mission overseas. That spending has amounted to about $60 billion, above and beyond our budget. That money will help with job creation and will help our economy grow. ... we've provided a lot of money in the short run, and in order to encourage and stimulate our economy, we ought to offset that money with additional tax relief ..." -- President Bush in Oct. 24, 2001, remarks at the Dixie Printing Co., Glen Burnie, Md.


"Our economy has had a shock. Many workers lost their jobs this week, especially in the airline and hospitality industries, in restaurants and in tourism, as companies struggle to remain afloat. I applaud those companies who are making extra efforts to avoid laying off workers even during difficult times. Many Americans have also seen the value of their stocks decline. Yet, for all these challenges, the American economy is fundamentally strong. We have the best-educated, most productive work force in the world. Our factories produce more goods, and a broader variety of goods, than any country in the world." -- President Bush in a Sept. 22, 2001, radio address



The G-7

"Last month's terrorist attacks could delay the resumption of strong growth in our economies. Decisive action has already been taken to support a robust recovery. Notwithstanding remaining short-term uncertainties, we are confident about our future prospects. We are strongly committed to bringing forward needed measures to increase economic growth and preserve the health of our financial markets. We will continue to monitor exchange markets closely and cooperate as appropriate." -- Statement of Group of Seven Finance Ministers and Central Bank Governors, Oct. 6, 2001



The Treasury Secretary

Paul O'Neill

Paul O'Neill
Photo: U.S. Treasury

"We are seeing concrete signs that we are beginning to regain our economic footing. Consumers are returning to the stores, airline usage is increasing and there are buyers again for 'big ticket' goods such as automobiles," -- Treasury Secretary Paul O'Neill's statement at the White House, Oct. 19, 2001


"The terrorist attacks of Sept. 11 created disruptions that swept through our economy very quickly. Our airways were shut down and all of the travel-associated industries effectively came to a halt. Consumers stayed home and, as a consequence, it now seems certain that when the numbers are tallied for the third quarter, they will show that our economy experienced negative real growth ... The depth of this contraction, as well as the pace at which the economy returns to a healthy rate of growth, will depend in large part on how fast consumers regain their confidence and on our success in incorporating new protections against possible terrorist acts without material reductions in productivity." -- Treasury Secretary Paul O'Neill's statement to the Senate Finance Committee, Oct. 3, 2001



The Business Community

"Forecasting is more difficult than ever, because the economic future is now to an unusual degree dependent on the future course of political, military, and related domestic and foreign affairs. Will we be able to prevent further acts of terror against the United States and punish the perpetrators effectively and justly? What costs and sacrifices will this new and very different war require, and how long will it last? In the near future, we should hope simply for a gradual return to normalcy, the usual routines of working, shopping, traveling, entertainment, etc. Over the longer term, it will help immensely to see some visible triumph over terrorists and the countries that harbor them." -- The U.S. Economy Before and After the Terrorist Attacks, an Oct. 26, 2001, report by Victor Zarnowitz, senior fellow and economic counselor at The Conference Board


"While nearly 90 percent of consumers say they will not cut back on their buying plans, it's important to note that this figure is very likely to fall as widespread layoffs begin to materialize. So far, consumers have helped the U.S. steer clear of recession. The likelihood of this scenario continuing is dwindling as the economic ramifications of the terrorist attacks continue to unfold," -- Lynn Franco, director of The Conference Board's Consumer Research Center, in the Sept. 21, 2001, release of a consumer survey predicting a recession