A Snapshot of the U.S. Economy and Capital Markets

The economy and capital markets were heading decidedly downward before the terrorist attacks intensified the public’s overall feeling of uncertainty and risk. While the post-September 11 panic selling has subsided, markets are still pricing in considerably higher risk premiums than existed prior to the terrorist attacks. This increase in risk-aversion affects economic growth and corporate earnings, because consumers are likely to curtail spending as they grow increasingly cautious in these uncertain political and economic times.