Analysts say the dip in the economy coincides with the September 11 terrorist attacks on New York and Washington. The last recession took place while the U.S. was at war in the Persian Gulf as well.
The Commerce Department reported today that consumer spending fell 1.8% in September, the largest drop since January 1987. The department said the fall is definitely related to the terrorist attacks. Following the attacks, consumers cut back on travel and stayed away from malls and restaurants. The drop in consumer spending followed a 0.3% rise in August.
Also, the Commerce Department said construction spending declined for a fifth consecutive month in September. The 0.4% drop brought spending to $843.1 billion at an annual rate, the slowest this year. The last time construction spending fell for five straight months was August 1990 to January 1991, during the last documented recession, and prior to the Persian Gulf War.
Yesterday, the Commerce Department said the GDP contracted at a 0.4% annual pace in the quarter that ended Sept. 30, the biggest decrease since the 1990-91 recession. Analysts said they expect the GDP to contract again this quarter.
Also, manufacturing turned in its worst performance in October since the 1990-1991 recession, pulled down by the biggest drop in consumer spending in almost 15 years, the National Association of Purchasing Management (NAPM) reported today. The association’s factory index decreased to 39.8 last month from 47 in September, and was the lowest reading since February 1991.
