Osama bin Laden announced in a video taped sometime late in 2001 that the September 11 attacks "struck deep at the heart of America's economy." Fortunately he was wrong. The U.S. economy was scraped and bruised on that terrible day, but it is clear that the heart of the American economy is still beating strongly. The U.S. economy has proven to be highly resilient. Despite an estimated $120 billion of damage and a great deal of anxiety, one year after the attacks the U.S. is in the midst of an economic recovery. There are three reasons for the resilience of the U.S. economy. First, the Federal Reserve cut interest rates three times in the wake of the attacks after cutting rates eight times in the eight months preceding them. Second, in May 2001, President Bush signed into law the first tax cut since 1986 and the Congress passed a stimulus bill, which included business tax cuts, in early 2002. Finally, and most importantly, productivity continued to grow throughout the U.S. recession. One of the greatest tests of the strength in underlying productivity trends is the performance in those trends during economic downturns and external shocks to the economy. Clearly, the U.S. productivity performance during the 2001 recession and following the September 11 attacks was spectacular. Capitalism is more than buildings and airplanes. It is embodied in the institutions and individuals of a society. While terrorists murdered a great deal of financial talent in their evil and cowardly acts on September 11, U.S. institutions and the vast majority of its creative talent remain intact. The end result was a quick reversal of economic fortunes. From one month to the next, Americans stopped and reflected, became resolved about fighting back, and then returned to work as the most productive citizens in the world. Osama bin Laden missed his mark.
|Author:||Wesbury, Brian S.|
|Publisher:||United States. Department of State|
|Source:||September 11: One year Later: A Special Electronic Journal of the U.S. Department of State, September 2002, p. 9-13|