Economic Repercussions of September 11 Continue to Spread

The ripple effect of the terrorist attacks has spread far and wide. It was clear from the beginning that the airline and insurance industries, as well as the stock market in general (except for the armaments industry!) would suffer. But there have been other consequences that no one could have predicted.

The ripple effect of the terrorist attacks has spread far and wide. It was clear from the beginning that the airline and insurance industries, as well as the stock market in general (except for the armaments industry!) would suffer. But there have been other consequences that no one could have predicted. From a drop in the use of film at tourist sites to shrinking sales of toilet paper and tissues to hotels, these sorts of knock-on effects will continue to be felt in the coming months and years. Eastman Kodak, the world's largest photography company reported a 77 percent drop in third-quarter earnings. Also of interest are the areas that have benefited from the crisis &endash; canned soup sales, video rentals, and florist orders have all risen. But in the atmosphere of paranoia and confusion that the Bush administration has created, it is no wonder people are not confident about the future.

Immediately after the unprecedented events of September 11, we predicted that this spelled the end for the economic boom. Billions of dollars were lost in the destruction and in lost business, and more importantly, people's optimism that the boom would recover quickly from its "slowdown" was shattered. With the economy already faltering, these attacks couldn't help but throttle the one thing keeping things from completely collapsing - consumer confidence. Consumer spending accounts for two thirds of all economic activity in the US. With record layoffs even at the height of the boom, and tens of thousands of jobs cut in the past few weeks, it is no wonder the working class has stopped the past decade's orgy of spending money it didn't even have. Consumer confidence has now hit a seven-year low, dropping by 1.8 percent - the largest decline since 1987.

The vital manufacturing sector has plunged decisively into recession. The National Association of Purchasing Management reported that manufacturing activity fell to 39.8 last month from 47 in September, the 15th consecutive month of decline. An index above 50 signifies growth in manufacturing, while a figure below 50 shows contraction. Factories have sharply cut production and eliminated 1.1 million workers in the last 14 months. The Labor Department said the national unemployment rate soared half a percentage point to 5.4 percent last month from 4.9 percent in September - the highest in nearly five years since a matching 5.4 percent rate in December 1996. GDP shrank at a rate of 0.4 percent in the third quarter, and a likely further decline in the 4th quarter will signify a full-blown recession. All this in spite of the Federal Reserve's frantic interest rate cuts and Bush's massive tax cuts and increased military spending.

Bush's war on terrorism is nothing but a war on the world working class. On the home front he is desperately trying to find someone to blame for the sudden economic drop - who better to blame than "terrorists"! But the fact remains that this growing economic crisis is part and parcel of life under capitalism. As we have explained before, and as the serious bourgeois analysts openly acknowledge, the economy was already on a sure path to stagnation and slump even before September 11. The attacks acted only as a catalyst and sped up and sharpened the inevitable. Bush will try and place the burden for getting out of the crisis on the backs of the workers who are at the moment bewildered and ultra-patriotic. But that is already beginning to change. The war is not going at all as planned, and slowly but surely, Bush's astronomical approval rating is shrinking, and with it his chances of doing the impossible - stamping out terrorism and building a strong economy in a "peaceful" world. We must remember that Bush Sr. had similar approval ratings after the Gulf War, yet less than a year later he lost the presidential election due largely to the minor recession of 1991. This explains why Bush is suddenly concerned with the effects the attack will have on the working class. It is only because he fears the social and political repercussions, which will inevitably come sooner or later.

The bosses are using the fading economy as an excuse to drill for oil in Alaska, to enable Fast Track legislation, expand NAFTA into the FTAA, and more. Not to mention the curtailing of civil liberties in the name of "national security". The Republicans and Democrats alike have no real desire to improve the lives of working people. Peacetime or wartime, their goal is the same - to defend private property over the means of production and exchange. The profit motive is the decisive driving force behind the capitalist economy (and its domestic and foreign policy). The only way out of the cycle of boom and slump, and to truly eradicate the conditions which breed terrorism, is to take the commanding heights of the economy and place them under democratic public control. By eliminating the anarchic and wasteful profit/market system, the world working class could democratically plan its needs in the interest of the whole of humanity. This is the only solution which can offer consistent economic growth and stability, genuine global peace, and a bright future for the billions of workers and poor people around the world.