Scribbles

[Bryan (a.k.a. Bryan)]

9-11 Attacks Pushed Economy Into A Mild Recession

"The September 11 attacks pushed the U.S. economy into a recession that will be mild both in depth and duration," said Harvey Rosenblum, NABE President and Dallas Fed Senior Vice President and Director of Research. "The rapid easing of monetary and fiscal policy this time around should enable the economy to return to positive growth more quickly than usual and with lower interest rates and inflation than during the 1990s expansion."

Survey Summary

* NABE panelists expect negative GDP growth in the last two quarters of 2001, with declines of 0.4 percent in the third quarter and 2.0 percent in the fourth quarter, which marks a large downward revision since the September survey medians of respective GDP gains of 1.4 percent and 2.3 percent.

* Panelists say that it is 90 percent likely that the economy is in a recession. The recession is expected to be mild, however, with positive GDP growth rates of 1.1 percent in 2001 and 1.3 percent in 2002, with 82 percent of panelists expecting a return to sustained, positive growth in the first half of 2002.

* The 9-11 terrorist attacks were estimated to have negatively impacted real GDP growth by 1 percent in Q3, 3.0 percent in Q4, and 1.6 percent in Q1 of 2002, with 2001 annual revisions mostly in inventories and trade, but 2002 revisions primarily in consumption spending and business fixed investment.

* The projected unemployment rate for 2001 was raised from 4.6 percent to 4.8 percent, while the projected rate for 2002 was revised upward sharply from 4.9 percent to 5.9 percent.

* Ninety percent of the NABE panelists thought that the economy would return to positive growth more quickly than in a typical business cycle due to the rapid easing of monetary and fiscal policy, with 60 percent of the effect attributed to monetary policy.

* Economists expect generally lower inflation and interest rates in the next business expansion, and all but six of 33 NABE panelists expect the Federal budget balance to be in surplus by the end of the next cycle.

The NABE Outlook presents the consensus of macroeconomic forecasts made by a panel of 33 professional forecasters from the membership of the National Association for Business Economics. The survey was taken during November.

http://www.nabe.com/publib/macsum.htm