America's bloodiest day
Attacks may push economy into recession

Bloomberg News Service

BOSTON — U.S. companies' fourth-quarter profit may decline as much as 15 percent after the worst terrorist attacks in U.S. history, said Chuck Hill, research director at Thomson Financial/ First Call.

"In this environment, where we're hanging by a thread with consumer spending keeping us going, why, this might be enough to push us over the edge" into a recession, Hill said.

Analysts had forecast a 2.7 percent decline for the fourth quarter before the attacks, he said, and First Call had expected a decline of at least 5 percent. Now the odds are that the decline will be 10 percent to 15 percent, Hill said.

Airlines, hotels and retailers may be among the hardest-hit industries as people avoid flying and the attacks weaken consumer confidence, analysts said. Any retaliatory strikes may also push up oil prices, affecting everything from trucking companies to producers of basic materials such as chemicals and paper.

"Shocks of this sort cause a deferral of business expenditure, retrenchment on the part of the consumer," said Byron Wien, director of investment strategy at Morgan Stanley Dean Witter & Co., the largest tenant in the World Trade Center, which collapsed after it was struck by hijacked planes Tuesday.

Scores of companies shelved air travel plans after the attacks, and almost nine of 10 corporate travel managers expect to curtail air travel in coming weeks, according to a survey by the Business Travel Coalition.

The economy grew 0.2 percent in the second quarter, according to a Commerce Department figure that may be revised. A recession is defined as two quarters of contraction.