Economists offer pre-attack
reasons
By Heather Mangold
City
Editor
Economists are suggesting that the economic effects
of the nation's terrorist attacks could be related to the state of the
economy prior to the national tragedies.
Gerald Lynch, a professor in the School of Management,
said the American economy was facing trying times even before terrorists
hijacked planes, attacking the World Trade Center and the Pentagon.
"It's difficult to disentangle what would have
happened without the attacks," said Lynch. "Some firms were going to
be in trouble anyway."
Airline and insurance industries have been hit
especially hard as a result of the lack of consumer confidence, which
followed the attacks, said Lynch. According to an economic report released
earlier this week, consumer confidence for August had already indicated
signs of declining levels.
Will Masters, an associate professor of agricultural
economics, said the confidence of American consumers would determine
the degree of the success of terrorist attempts to damage the nation's
economy.
"If response increases uncertainty in the world,
investment levels will be lower and spending levels will be lower,"
said Masters.
Masters said that if the United States reassures
the world's economy, damage would be contained.
But damage has already had some effect.
Large industries, such as the airline industry,
have reported the layoffs of thousands in an effort to keep companies
afloat.
Whether or not the layoffs are a direct result
of the terrorist attacks is difficult to speculate, said Lynch.
"If the economy had been booming the way it was
last year at this time, and the events two weeks ago would have occurred,
we wouldn't have seen as many layoffs as we are seeing now," said Lynch.
Because business travel had declined prior to the
attacks, the airline industry had already begun enforcing layoffs.
Other aspects of the economy had already begun
to show warning signs as well.
The American economy had already begun its downturn
because it had grown so fast before, said Lynch. He said a cessation
in the economy was not unexpected.
"At some point the economy's rolling along, making
a lot of money, people are buying goods," said Lynch. "There's a lag
before you pick back up that action again. There's going to be an adjustment."
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