Terrorist Attacks Could Spell Trouble For Economy
September 12, 2001
Just as trucking was beginning to see signs of hope that the economic slowdown was starting to reverse itself, economists are concerned that the terrorist attacks on New York City and Washington, D.C., could send the U.S. into a recession.
The big economic concern is consumer confidence. Consumer spending is what so far has kept this country out of an outright recession, despite what most analysts acknowledged was indeed a recession on the manufacturing end.
Consumer confidence fell 10 points a month for four months following the Iraqi attack on Kuwait, beginning from about where it is now, according to Newport Senior Economist Jim Haughey. A short recession quickly followed. The economic situation today is similar to a decade ago, with the economy sluggish just coming out of a period of marked slowdown. The economy may be more vulnerable today because most of the rest of the world is still weakening.
A decade ago, consumers were spooked by widespread media reports of fuel shortages and coming military casualties. Both turned out to untrue but did scare consumers into spending. More recently, Haughey says, the current economic troubles are partly due to Al Gore's refusal to concede last November, so that many stayed by the TV instead of going to the mall.
"Have consumers learned not to overreact?" Haughey asks. "Probably not. If the bombing scare keeps us too occupied to shop for a week or if air transportation is interrupted for more than two to three days, look for the economy to stay near zero growth in the summer and very possibly decline in the fall. Achieving clearly positive growth later this year was only at best an 80-20 chance before the bombing."
More specific to trucking, Haughey notes that carriers in the New York area will have two or more days of traffic disruptions from closed highways, while all carriers will bear the cost of several days of closed airports.
However, he says, these costs will pass quickly. Then carrier health, as always, depends on freight volume.
Another factor is the stock markets. International stock markets fell sharply following the tragedy. The New York Stock Exchange is not expected to open before Friday.