US Economy Fails to Recover from Terrorist Attacks

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Last updated at: (Beijing Time) Monday, July 22, 2002

US Economy Fails to Recover from Terrorist Attacks

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Contrary to the US Federal Reserve's claim earlier in the year that the US economy would start to pick up in the middle of the year, the economy is proven to be going downhill, said a Hong Kong financial news magazine Monday.

Money Times, the weekly magazine that goes with the Hong Kong Economic Times newspaper, said that the Dow Jones index even fell below the September 11's day low of 8,062 points on Friday.

The cover story of the magazine commented that in spite of the recent spate of American accounting debacles, the current economicrecession in the United States is, in fact, a fallout from the September 11 attack in New York last year.

"The September 11 attack denotes that the United States is no longer an investment haven, as investing in US assets also carriespolitical and financial risks," it said.

At the time when the Enron debacle was exposed in the beginningof this year, the Nasdaq index started to soften its climb, while the US dollar also started to weaken.

Capital flights from the US stock investment funds and stocks amounted to 19.3 billion US dollars and 18.4 billion dollars respectively during the week of July 11 to July 17. During the same week, investors also pulled out as much as 3.9 billion US dollars from bond investment funds, the article continued.

It insinuated that the capital has been reinvested in other regions. "In spite of Japan's and Europe's stagnant economies, their currencies have turned stronger recently," it said.

Also, consumer confidence in the United States has also declined, as the positive signs seen early in the year have failedto hold, the report continued. The leading economic indicators announced Thursday have remained stagnant, with US enterprises' level of investment failing to achieve any remarkable rebound, it said.

The scenario indicated that the enterprises there are taking a bearish view of the US economy, as signs of a "double recession" are emerging, the article said.

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