The terrorist attacks on the World Trade Center will cost New York’s economy up to 105 billion dollars and 115,000 jobs. Allen Hevesi, the city comptroller, did a recent report of the breakdown of some costs: Rebuilding the World Trade

The US policy response was that the US responded quickly to support economic activity by cutting interest rates. The Scottish Executive Publications reports “ Large amounts of liquidity were injected into the monetary system following the WTC attacks by the major monetary authorities across the G7 economies in order to ensure that the global financial system continued to function smoothly. The impact of this easing of policy will not be immediate: there is a broad view that there is a 6 to 9 month lag operating in the US between monetary easing and the subsequent impacts on the real economy. This cut has now been followed by a further half point reduction on October 3rd, taking rates to 2.5 percent, their lowest for almost 40 years. Moreover, the consensus appears to be that further cuts will be seen this year, possibly taking rates down to 2 percent.”

Over 25,000 It and telecommunication workers around the world have been working intensely to assure continuity of service. The Washington Post reports “ Inclusive of the immediate cost of hardware and software replacement, over 20,000 IT and telecommunications contractors will support in-house teams for several weeks to ensure continuity of business for financial services. The costs include telecommunications and computer equipment replacement, installation and support. Over 100,000 IT personnel will be relocated. There will be more investment in security, data storage, back-up and disaster recovery audits, procedures and policies. The full extent of damage to telecommunications infrastructure in Manhattan is still not known. Underground installations will systematically need to be assessed, repaired, redesigned, replaced and re-routed as the clean up and reconstruction continues at least until 2004. The immediate impact of cost on communications infrastructure was 1.7 billion dollars and the long term impact is estimated to be 6 billion dollars.”

A recent article on the Internet titled, “ Attack on America”, reported that the Federal Reserve to push a key interest rate to its lowest level in four decades in an effort to get consumers spending again. In the midst of the terrorist attacks, consumer confidence has plunged by a large amount, which is a threatening development given that consumer spending accounts for two-thirds of total economic activity. In the New York Times Business Day section, The Commerce department reported “Consumer spending fell 1.8 percent in September and that Construction Spending declined 0.4 percent in September, the fifth consecutive monthly drop. The decline brought spending to $843.1 billion at an annual rate, the slowest this year. The drop in Consumer Spending, after a rise of 0.3 percent in August, was larger than expected and the sharpest since January 1987, when blizzards kept shoppers at home. Growth in personal incomes, which rose less than 0.1 percent in August, was the weakest since incomes fell 3.9 percent in January 1994.” Many analysts believe that the country is now in a recession, which will probably last until next year. Because of the attack on America, Feds are trying to cut interest rates. The New York time reports, “The rate is now the lowest in four decades. Investors are expecting a quarter-point cut next week and another quarter-point decrease by the end of the year, based on trading in federal funds futures contracts. The factory report on November 2, showed little threat from inflation, making it easier for the Fed to lower rates. The index of prices paid for raw materials fell to 32.5 in October, the lowest in more than fifty years, from 36.3 the previous month.” The University of Michigan’s initial report on consumer confidence for September showed a large, unexpected decline. While most economists had earlier predicted that the economy would recover later in the year, the August Blue Chip consensus predicted GDP growth of 1.7 percent in the third and 2.8 percent in the four

Some topics in this essay:
Trade Center, Vietnam War, Business Week, York Times, Scottish Executive, Executive Publications, Guardian Unlimited, Washington Post, Gulf War, America Feds, world trade, trade center, reported “, world trade center, reports “, consumer confidence, stock market, war terrorism, insurance companies, government spending, percent august, prices trigger automatic, equity prices trigger, trigger automatic sale, fsa solvency rules,