Industry and Economics. (Abstracts)‪.‬

ECONOMIC RECOVERY POLICIES OF THE UNITED STATES AFTER THE SEPTEMBER 11TH TRAGEDY. Eric Rahimian, Dept. of Economics, Finance and Office Systems Management. Alabama A&M University, Normal, AL 35762. The U.S. appeared to he in a mild recession, when the September 11th attack occurred. Due to the destruction in New York, the American Stock Market closed until September 17, 2001. All major stock indices (DJA, NASDAQ, S&P 500) fell between 12 and 18 percent during the first week of operation. The impact of the attack was felt in travel, retail, wholesale, manufacturing and other industries. The unemployment rate continued rising reaching 5.4% in October and 5.9 % in December. The Purchasing Managers Index dropped from 47 in September to 39.8 in October. Sonic feared that investors might panic and pull their money heavily out of the U.S. markets. [he Federal Open Market Committee that had reduced the short-term interest rates seven times, lowered them again four more tinnes to stabilize the U.S. markets he federal funds and discount rates were respectively 3% and 2.75% in early September 2001 arid were re(Iuced to 1.75% arid 1.25% by the end of the year. On the other hand, partisanship in Congress and the An thrax scare mitigated the passage of a broad-base fiscal stimulus package. Fortunately, the timely expansionary monetary policy, time tax reliefs for victims' families, and the increase in defense expenditure seem to have been effective in sparking a recovery. Also, the resilience of consumer demand reduced the inventories and companies started Hiring. About 66,000 new jobs were added iii February 2002. The Purchasing Managers Index rose from 39.8 in October to 54.8 in February 2002. Considering the recovery prospect, the Fed has left the short--term interest rates the same since January. Congress has also rethought the magnitude of fiscal stimulus needed. The recovery however is riot expected to be too fast if consumers' debt dampens the demand.