The U.S. economy was already on a weak footing before the attacks of September 11, which will provide further weakness. Many sectors of the economy will be affected and jobs will be lost. The news may be depressing for the next few months. These problems notwithstanding, the economy will recover. Both the U.S. government and the Federal Reserve are working to maintain the stability of the financial system. The Fed, which has taken steps to ensure important liquidity in the financial markets, recently lowered interest rates for the ninth time this year and may drop it further again soon.
Congress has passed a budget/spending bill and is considering additional tax measures. These efforts should provide economic stimulus. Moreover, rebuilding efforts will result in increased demand in many areas including steel, construction, and technology infrastructure. Prior to September 11, many economists were projecting that the economy and the stock market would begin to recover in the fourth quarter of 2001. Obviously, this timeframe has been altered: the current consensus seems to be that we’ll see a recovery within the first half of 2002. So be patient and stay the course.
