Analysts are deeply divided as to the possible economic effects of the Sept. 11 attacks on NYC and Washington. For every economist saying recession is now assured, there's another saying pure patriotic zeal will bring Americans into shopping malls, the stock market, and onto car dealers' lots. Here are the basic arguments on both sides:

• Central banks around the world took swift and aggressive actions to prevent dislocations in global financial markets. At press time, at least, it appears they succeeded.
• The Fed's intra-meeting half-point interest rate cut at 8:30 a.m. on Sept. 17 (right before the stock market reopened) brought to 3.5 points the total rate reduction implemented by the Fed since January. The U.S. rate-cutting move was followed promptly by the Bank of Canada, the European Central Bank and other Western central banks. As well, the Fed was atypically clear in stating it would maintain an easing bias going forward to ensure sufficient liquidity for financial markets.
• While consumers may not spend their money on products this month or next, they are likely to continue donating to relief organizations and/or charities at unprecedented levels. These donations will be spent, creating economic stimulus.
• Insurance payments plus the $40 billion spending package approved by Congress (a minimum $20 billion of which will go for disaster relief and rebuilding in New York and Washington, D.C.) will also provide a big fiscal shot in the arm, although, admittedly, these stimuli will be concentrated geographically.
• Rhetoric out of Washington virtually assures a geographically broader fiscal stimulus package—in the form of tax cuts or increased government spending.
• Haggling aside, the government will bail out the airline industry.
• Reduced demand for airline fuel will free up distillate capacity for heating oil, avoiding a price surge.

• Economic data released before the terror attacks on Sept. 10 showed an economy on the brink if not already into negative growth. For example, the Weekly Leading Indicator published by the Economic Cycle Research Institute ( ECRI ) fell to a new low in the week preceding the attacks. "The U.S. economy seemed to be teetering on the verge of recession even before the terrorist actions," ECRI says.
• Incalculable business revenues were lost during the week after the attack. Business disruptions are attributed to lost productivity among distressed workers, severe air freight disruptions, problems with mail and small package deliveries, sharp curtailments in international air traffic, and much tighter security at U.S. borders, which disrupted cargo shipments and especially hurt trade in perishable goods such as foods and flowers. One estimate places the loss in third-quarter GDP growth at up to one full percentage point. (GDP grew only 0.2% in quarter two, according to revised statistics from the Commerce Dept.). All this is quite likely to either create or reinforce an already negative third-quarter GDP number, which could, in turn, damage the fragile psyches of U.S. consumers and business folk.
• While the government may bail out the airlines, peoples' willingness to fly may be seriously diminished. Also, drastically increased airport security will mean fewer flights are possible and the costs of remaining flights are likely to rise. This will translate into less tourism and less business travel (for sales calls, conferences, trade shows, etc.), which will reverberate through supporting industries such as convention centers, hotels, car rentals, and restaurants. Another possible negative outcome: Surging gasoline prices as more people choose ground over air transport, driving up demand in an already tight market.
• Because the terror attacks seem to have originated in the Middle East, there is higher risk that oil prices could rise and/or supplies be disrupted.
• Despite massive fiscal and monetary stimulus, American consumers may decide that any type of "conspicuous consumption" is simply inappropriate while so many folk are grieving for lost friends and family members.

...but the leadtime indicator was signaling renewed
economic weakness even before terrorists struck the U.S.
on Sept. 11.