CONSUMER CONFIDENCE AFTER SEPTEMBER 11

After the tragic loss of human life and massive property destruction of the September 11 terrorist attacks, consumer confidence was surprisingly resilient.

"Consumer Confidence after September 11," by C. Alan Garner, assistant vice president and economist at the Federal Reserve Bank of Kansas City, examines the impact of the terrorist attacks on consumer confidence at the end of 2001. The article is featured in the second quarter 2002 edition of the Economic Review.

Garner writes that a decline in consumer confidence during the fourth quarter of 2001 was due primarily to weaker economic conditions in previous quarters and did not come in response to the terrorist attacks.

The two major measures of consumer confidence, the Conference Board's Consumer Confidence Index and the University of Michigan's Index of Consumer Sentiment, started to recover by the end of 2001 and seem to have maintained a fairly normal relationship to other economic indicators, Garner writes.

The consumer confidence indexes did not contain much new information for analysts or policymakers during the fourth quarter, Garner writes, but the resilience after September 11 did offer some reassurance that the terrorist attacks would not have devastating economic consequences.

The article and the entire issue of Economic Review, the research journal of the Federal Reserve Bank of Kansas City, are available on the Bank’s Web site at www.kansascityfed.org.

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