Though the Sept. 11 terrorists struck the American economy as well as the World Trade Center, the economy is still showing signs of life.
Lower interest rates and tax breaks may spur new economic growth, and tighter relations among countries may foster international trade, while lower gas prices may give consumers greater spending power, according to some experts.
In these ways, the U.S. economy may deliver on President Bush's assertion that terrorists failed to 'touch the source' of American economic success.
'I ask your continued participation and confidence in the American economy. Terrorists attacked a symbol of American prosperity. They did not touch its source,' Bush said in a Sept. 20 address to the nation. 'America is successful because of the hard work, and creativity, and enterprise of our people. These were the true strengths of our economy before Sept. 11, and they are our strengths today.'
In view of the tragedies and tremendous loss of life Sept. 11, the economy was far from the collective mind of the American people. However, the economy is such a central part of the American way of life that virtually all citizens are affected by its changes.
Since Sept. 11, the government has taken steps to increase consumer demand in a faltering economy by offering $40 billion in immediate relief aid and defense spending, increasing tax benefits and unveiling the Back to Work Plan. The plan offers financial aid, benefits and encouragement to those whose jobs have been affected by the recent events.
The Federal Reserve has also lowered interest rates for loans twice since then, reducing the rate by a significant full percentage point from the Sept. 11 figure, in hopes of keeping the current economy strong by stimulating long-term consumer investment now.
This flurry of monetary and fiscal policies brought about by the government could be viewed as something positive stemming from the attacks.
'One thing that is helpful in a sense about these events is that there is significantly less bipartisan debate about economic policymaking,' said Charles Engel, a UW-Madison professor of economics and public affairs.
There is some debate, however, over who should receive the benefits of large-scale tax cuts.
'Corporate tax breaks would have more of an immediate effect than individual tax breaks, because they would be the quickest way of increasing investment in capital, which in turn would boost the job market,' said Ray Unger, chair of Unger Capital Management.
That view would come as good news to large corporations such as airplane giant Boeing. In reaction to the changing business environment following the attacks, Boeing has been forced to cut 30,000 jobs by the year 2002. The company also reported third-quarter losses not anticipated before Sept. 11.
However, the same day Boeing announced its job decrease, China announced it was planning to acquire $144 billion in commercial jetliners by 2020 to support its vastly growing aviation market. This brings to the table another way out of the growing economic recession, the influence of the global economy.
President Bush and congressional leaders are talking about reinstating fast-track negotiating authority, Engel said, which would give Bush more power in rejecting or accepting trade agreements with other countries. This authority could encourage freer trade between the United States and countries that already hold that position on global trade.
'If Congress gives the president fast-track authority, it may wind up improving overall global trade,' Engel said. 'It could get foreign countries, and in particular third-world countries, to see that we are on their side.'
Unger also noted the importance of trade in light of a growing international economic recession.
'Japan and a lot of other countries are also falling back into deflationary recession. We need to get our economy going to stimulate theirs,' he said. 'It fits the old economic saying, 'When the U.S. economy has a cold, the whole world gets pneumonia.' The two are very dependent upon one another.'
One global commodity that affects everyone, especially Wisconsin residents around this time of year, is oil. Despite a momentary spike in gasoline prices immediately after Sept. 11, energy prices, from gasoline to heating oil to natural gas, may be decisively lower than last year's prices. Since the Sept. 11 attacks, airlines have decreased flights, lowering demand for jet fuel by 20 percent. This increase in supply has created an immediate response in gasoline prices. Americans at the pump have seen the national average drop 11 cents per gallon in the past three weeks.
This indication can only mean good things for the economy, according to Unger.
'Gas [is] an inelastic good'gas prices going down means more money in people's pockets, which inevitably is pumped back into the economy,' he said.
With some aspects of the economy showing signs of improvement since the terrorist attacks, talks of a serious recession have quieted down. Whether these signals mean an upswing for the economy, however, is an entirely different situation.
'It's very hard to predict what the economic consequences will be; you look to past events in history and this situation is very unique,' Engel said. 'You just don't know how people will react.'
