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America's New War: Terrorist Attacks' Impact on Economy

Aired September 18, 2001 - 05:04   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: we still don't know the full impact of these terrorist attacks on the nation's economy.

CNN's Brooks Jackson looks at the early signals on where we're headed.

(BEGIN VIDEOTAPE)

BROOKS JACKSON, CNN CORRESPONDENT (voice-over): The attacks hit the U.S. economy, too. Airlines could lose billions and lay off tens of thousands. With long security delays discouraging travel, many airlines already are cutting operations 20 percent. Orders for new airliners could suffer. Boeing's stock plunged as the market reopened with a big loss.

Hotels braced for a reduction in travel business. Trucking was hit. There were 12-hour delays at the Canadian and Mexican borders last week. Many factories shut down, unable to get shipments.

As America mourned, stores emptied. Example: Bookseller Barnes and Noble says sales at its 569 superstores were down 55 percent on the day of the attack.

The economy was barely growing before. Now, many economists expect it will shrink.

JERRY JASINOWISKI, NATL. ASSN. OF MANUFACTURERS: Business stopped last week, and it's going to be slow going this week. So the month of September is going to be a very weak month, and that probably is going to pull the third quarter into negative territory.

JACKSON: More economists now fear a full-blown spiral into recession.

(on camera): It will take weeks or even months before the full economic effects are known. And they could be dire. Nobody really knows, or can know. But as Americans went back to work this week, there were some encouraging signs.

(voice-over): Of course, economic cheerleading. Treasury Secretary Paul O'Neill issued a rosy forecast at the opening of the stock exchange Monday and in interviews during the day.

PAUL O'NEILL, TREASURY SECRETARY: Crops are still growing the in the fields, when people are still showing up in the factories, and shopkeepers are out there. Even here in mid-town New York, you can begin to feel a quickening pace again.

Labor and business staged a show of patriotic unity in the persons of AFL-CIO President John Sweeney and U.S. Chamber of Commerce President Tom Donahue - an economic odd couple.

THOMAS DONOHUE, U.S. CHAMBER OF COMMERCE: We're going to put all our resources to put down those maniacs, and quite frankly, to go out and kick some economic butt.

JACKSON: The Federal Reserve announced another half-point cut in its key interest rate and signaled more cuts would come if needed.

In Congress, leaders were drafting proposals for business tax cuts to add further economic stimulus, leading some to predict the nation would still avoid a recession and begin a strong recovery next year.

JASINOWISKI: ... that we would get maybe stronger growth as we move forward in 2002 than we might have gotten if this had not occurred.

JACKSON: Brooks Jackson , CNN, Washington.

(END VIDEOTAPE)

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