The September 11 attacks have had a significant economic impact in the United States, jolting an already weakened economy and causing a temporary, but sharp decline in consumer confidence.

Jim Smith, a business professor at the University of North Carolina, has a unique perspective on September 11. That day he was attending an economic conference next door to the World Trade Center. The economic effect of the terror attacks, he says, was severe and immediate.

"It scared consumers to death. And it knocked the economy for a loop," he said. "You close the stock market for a week. Airplanes can't fly for several days. Everybody is glued to their TV's and not a lot of commerce is going on."

While it wasn't fully recognized then, the U.S. economy on September 11 was already in recession. An economic downturn, the first in 10 years, had begun the previous March. The stock market, which tends to predict future economic activity, had been declining since February 2000. Speaking last January, Joe Stiglitz, the Columbia University economist and Nobel Prize winner, said the deepening post-September 11 slowdown presented a challenge to policy makers.

"I believe the U.S. economy is extremely strong. It will recover from this downturn just as it has recovered from every other downturn," he said. "The question is how do we make that downturn as short and as shallow as possible."

The solution, adopted by the Republican president and opposition Democrats in Congress, was a huge, temporary boost in government spending. The stimulus program, combined with the cumulative effects of 11 interest rates cuts by the central bank, put money in the hands of consumers and contributed to a strong economic rebound in the first three months of this year.

But other events unrelated to September 11, such as the accounting fraud that sent two major companies into bankruptcy, further shook consumer confidence and tempered the recovery.

David Huether of the National Association of Manufacturers says the recovery is being held back by the reluctance of businesses to boost capital investment.

"One of the main reasons for that is that there is skittishness on the part of manufacturers to expand capacity, investment," he said. "So to an extent 9-11 has played a role in dampening the confidence level we're seeing in the manufacturing community."

Mr. Huether, like other economists, anticipates a very modest recovery with U.S. economic growth of no more than two percent this year.

But Jim Smith at the University of North Carolina is much more optimistic. He believes last year's big tax cut, the stimulative effect of government spending and low interest rates lay the foundation for a brisk recovery. He expects the upcoming Christmas buying season to be the best in U.S. history.

"The mantra of the American consumer is as follows: Shop until you drop and fall to the floor. Then rest for a while, pick yourself up and shop some more," Mr. Smith said. "And as long as we have income we shop."

U.S. consumer income, says Professor Smith, is three percent higher than it was a year ago.

The U.S.-induced 9-11 slowdown has been global. The European economy is as sluggish as the United States. Asia has been less directly affected.

But if there is one sector worldwide that has continued to suffer from the 9-11 attacks, it is transportation. People have been reluctant to fly and that has hurt airlines, which have slashed their capacity and laid off tens of thousands of workers. Very few of the world's major airlines are currently profitable, and several teeter on the brink of bankruptcy.