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Compiled by George McCrory
300 Plaza Centre One
Iowa City IA 52242
(319) 384-0012; fax (319) 384-0024
e-mail: george-mccrory@uiowa.edu

Release: Sept. 17, 2001

UI experts respond to the question: What are the short- and long-term prospects for the U.S. economy in light of last week's terrorist attacks?

Stephen Williamson, professor of economics and head of the Department of Economics, (319) 335-0831

With airlines saying they facing heavy losses after last week's attacks, they are seeking federal loan guarantees to help them continue operations. While there would be no immediate impact on the federal budget, Williamson said there could be long term impacts if the government needs to pay off these loans. Overall, the slowdown of air transportation means "a slower rate of economic activity, which is bad for the economy as a whole."

Michael Stutzer, professor of finance, (319) 335-1239

Stutzer said today's trading went as many experts predicted, with the stock markets seeing a 4 to 5 percent drop at the open and then some stabilization as the day continued. He added that the markets will be looking for further stability; the markets don't need additional bad news, such as any cuts in oil supplies, to fuel uncertainty. He added that the Fed's decision to lower its rates for interbank loans by a half percent confirmed the its commitment to aiding market recovery. The U.S. government could issue more short-term bonds at a now lower cost to pay for recovery efforts, Stutzer said.

The UNS Forum is an occasional series that puts questions about today's headlines to University of Iowa experts. If you have a question you'd like to see answered, submit it to stephen-pradarelli@uiowa.edu for consideration. Please put "UNS Forum Question" in the subject line of your email.