"While the financial sector will suffer, the base economy was not hit by this attack and will continue to function, although the initial shock may take several months to wear off," says John Anton, an economist with the Washington, D.C.-based forecasting firm dri-wefa. The firm has put together a "shock forecast" to measure the impact of the terrorist attack on the U.S. economy. It sees most of the negative impact confined to the fourth quarter of this year, with the economy coming back strongly in the first half of 2002.
DRI-WEFA's original "base forecast" called for gross domestic product to grow at an annual rate of 2.1% during the fourth quarter. The "shock forecast" has trimmed that prediction back to only 0.1%. But that is the worst of it. DRI-WEFA's "shock forecast" expects GDP to grow at an annual rate of 2.2% in the first quarter of next year, compared to its original 2.3% forecast. By the second quarter of 2002, DRI-WEFA sees the economy making a strong comeback with GDP growing at an annual rate of 3.5% compared to its original forecast of 2.8%. Overall, GDP is now expected to grow 1.4% this year and 2.2% next year. This is only down slightly from the original 1.5 and 2.4% growth rate predicted before the terrorist attack occurred.