Economic News
New York State Assembly
Sheldon Silver
Speaker of the Assembly
Herman D. Farrell, Jr.
Chairman of the Ways and Means Committee
Revised Edition October 1, 2001
Edward M. Cupoli, Chief Economist
View of Major Economic Forecasters on World Trade Center Impact
  • A large majority of economists (over 80 percent) surveyed by both Blue Chip and the National Association for Business Economics (NABE) expect at least a mild recession. Most of these economists did not expect a recession before the World Trade Center attack.

  • U. S. Real Gross Domestic Product (GDP) growth forecasts have declined across-the-board since the World Trade Center attack. Forecasts for 2001 growth are down close to a half a percentage point, with declines ranging from 0.3 percent to 0.5 percent from the prior forecast for the same period.

  • Forecasts for 2002 GDP growth are also down. Declines range between 0.8 percent and 1.2 percent compared to the prior forecast.
U. S. GDP Growth Forecasts Before and After September 11, 2001
    2001 2002
  Date of Last Forecast Before After Before After
Blue Chip Consensus September 19, 2001 1.6 1.1* 2.7 --
NABE Panel September 21, 2001 1.6 1.2* 2.7 1.5*
DRI-WEFA September 19, 2001 1.5 1.1 2.4 1.6 September 26, 2001 1.5 1.2 2.4 1.4
  * Annual numbers calculated based on quarterly data.
  • In terms of quarterly pattern, the GDP forecasts show general agreement. Although there will be some drop in GDP growth for the third quarter of 2001, by far the biggest drop will be in the fourth quarter of 2001. The impact according to these forecasts will probably quickly fade in 2002, possibly not lasting beyond the first quarter. Growth in third quarter 2002 rebounds even higher than previously anticipated in some forecasts due in part to increased government spending.

  • According to these forecasters, consumption is expected to be particularly hard hit by the attack due to declining consumer confidence and therefore decreased spending. Investment is expected to be hit hard due to uncertainty in the business environment.

  • These forecasters anticipate some offsetting economic impacts. In particular, increased government spending will offset some of the decreased consumer spending.

  • It is important to note that most of the post-WTC economic forecasts currently available were produced quickly and with limited information and, therefore, generally assume that any international military action is resolved quickly (or at least that any major uncertainty from such action is resolved quickly even if there is an ongoing "War on Terrorism"). Other assumptions include no significant impact on oil prices, and that no other major terrorist attack takes place. According to at least one forecaster, a second terrorist attack would drive the United States into a long-term recession.
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