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Wednesday, September 26, 2001
Attacks push economy into stormier seas
Terrorism has stepped up loss of consumer confidence
Associated Press
NEW YORK- Rarely in the history of conflict have such high costs added up so quickly.
   Just two weeks after the terrorist attacks on New York and Washington, airlines plan more than 80,000 layoffs, the world appears poised for recession and some congressional estimates say the United States could need an additional $100 billion for the war against terror and related costs.
   Growing anxiety about jobs and uncertainty arising from the terrorist attacks pushed consumer confidence in September to its lowest level in nearly six years, according to statistics released Tuesday.
   The Conference Board, a New York-based business group, reported its Consumer Confidence Index plunged to 97.6 from a revised 114 in August. The slide is the largest monthly point drop since it fell 23 points in October 1990, a few months after Iraq invaded Kuwait to spark the Persian Gulf War.
   Before, after Sept. 11
   The latest figure is based on data collected both before and after Sept. 11, when hijackers crashed three commercial planes into the World Trade Center and the Pentagon.
   But the Conference Board said that the difference in the data collected before and after that date was insignificant and that the downward trend was already in place.
   "(The index) would have fallen this far even without the attacks," said Lynn Franco, director of the Conference Board's Consumer Research Center.
   Other analysts disagreed.
   "When all is said and done, I'm sure the attack is going to be shown undermining confidence," said Mark Zandi, the chief economist at Economy.com. "A bunker mentality is descending on consumers and investors - everyone is battening down the hatches."
   The index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation's economic activity. The index compares results to its base year, 1985, when it stood at 100.
   Market is calmer
   The stock market calmly digested the Conference Board report. The major stock indexes closed modestly higher, having withstood several waves of profit-taking from Monday's big rally. Analysts were generally pleased with Wall Street's performance and noted that just holding steady is good news, given stocks' recent volatility.
   "We're still seeing buying and that's a step in the right direction," said Bryan Piskorowski, market commentator at Prudential Securities.
   The Dow Jones industrial average rose 56.11 to 8,659.97, bringing its two-day advance to more than 424 points.
   The Nasdaq composite index rose 2.23 to 1,501.63, while the Standard & Poor's 500 index rose 8.83 to 1,012.28.
   Also Tuesday, the National Association of Realtors reported sales of previously owned homes jumped to a record level in August, but have slowed in the wake of the terrorist attacks two weeks ago. Strong demand for homes has helped support the sagging economy, and the data appeared to bring into question how long that support would last.
   Before the attacks, most analysts estimated the weakened economy, along with corporate profits, would start to improve early next year. That forecast has been revised as the economic fallout begins to be assessed.
   A conflict could set the global economy back by $160 billion this year, according to one private economic forecasting company.
   War has in the past helped to strengthen weak economies like the one America is mired in. World War II pulled the United States out of the Depression as industry mobilized to build warplanes and other military hardware. The Vietnam War spurred an economic boom in the 1960s.
   But as President Bush has repeatedly stressed, this will be a war unlike any in history. There likely won't be any full-scale deployments of ground troops or massive arms buildup to track down Osama bin Laden, the No. 1 suspect in the Sept. 11 terror attacks.
   If the U.S. military attacks Afghanistan and captures bin Laden, it's unclear where the United States will retaliate next. Predictions of how long a war may go on and how much it might cost vary widely.
   Costs of wars
   In today's dollars, World War II cost $4.71 trillion and the Vietnam War cost $572 billion, according to the Congressional Research Service. The most recent conflict, the Persian Gulf War in 1991, cost $80 billion, adjusted for inflation, according to Congress' research arm - but 90 percent of that was picked up by other nations like Saudi Arabia, Kuwait and Japan. That isn't expected to happen this time since the United States is retaliating for attacks that took place on its soil.

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