The terror attacks against the US in September triggered a clause in NATO's charter that defines an attack on one member state as an attack on the alliance. Since September, some NATO units have already been retraining in anti-terrorist tactics and weaponry, and may be among the first units to be deployed outside of Europe if a sustained campaign against terrorism is actually waged in the coming year. The Fed reminded that a recession is commonly defined as two consecutive quarters of negative gross domestic product, the total output of goods and services in the United States. Thus, we have not yet entered into a recession, but many economists are stating that there is a very good possibility this will happen in Quarter 1,2002. The stock market which suffered an intial short-lived selloff after the attack has recovered somewhat, but is still low.
Consumers are worried about the ability of firms to recuperate and continue with business as usual.
Consumer spending was down in this 4th quarter and this, compiled with reported increases in U.S. unemployment, has been blamed as the major cause of a large decline in consumer confidence. Global markets have followed the dips and turns on Wall Street. Policymakers warned that a recession in the United States was likely to tip the scales for the rest of the world which has also been threatening to move in this direction. The dollar lost ground against the euro with the exchange rate closing this quarter at 0.98 euros to the dollar. This has prompted officials to consider the effects of additional travel and tourism between member countries of the EU and security implications given the continued war on terrorism.