b"Housing and the Economy in the Aftermath By David F. Seiders T U.S. economy was flirtingBuilders(NAHB)forecastsa newroundof taxcuts isalso he with recession priorthe terroristassume that major terrorist attacksbeingd ssedonCapitol Hill toiscuattacks on11, and thein theU.S.arebehindus, thatdespitegrowing concernsatthe September housing sector waslosing someforthcomingmilita initiativesF Reserve and infinanryederalthe yieldand that pop cial markets a t dissolution some success,bou of u supp isined for theour federal budgetes. larortmainta surplusadministration's efforts toTheFederalReservedropped combat terrorism a the globe.itsrget forfunds rroundTheseta the federalate conditions are essential toora by anotherbasisints (to 2.5 rest 50potionofconsumerandbusinesspercent) at the O 2ting ctobermeeconfiden andrevivaloftheof the F ral Open Market Comceedeindustries thatk thedirectmittee,the central bank is on too mostand hits from the terrorists - particu h as itrspro ess of oldmonito thegrlarly the airline and travel-relatedthe econ y.We're also assumomindustries. Restorationofconfi ing that concernsthe federal about dence also islrecovery ofsurplus will be back-burnered for critica to thedecimatedstockmarketandthe time being, allowing more fislarge parts offinancialicescal stimulus to be putplace. theserv in momentum aswell.Shockwavesindustries.Althoughsuchanaggressive from the attacks certainly will putEconomicpolicyma rshavefiscalpolicyresponsecanput keadditional downward p sure ona adyrushedtotheplate.T someupwardpressure onlongres lre he The shocks to thetheeconomyand thehousingFederalReserveimmediatelyterminterestrates,primarily market, at least over the balance offlooded the financial system withbecauseofconcernsaboutthe economy probablythis year. B thechances for aliquidityandcutitsshort-termsurplus,we're assumingthat the ut can be shakensubstantial reboundin 2002 andinterest rateon the m mix of mo ary and fiscal policy, targetorningnet2003 are q te good, particularlyof September 17. Thealso ledalongwithreducedcredit ui Fed offifforthehousingsectorw ardinated effort of foreigndemands fromprivate sector, quicklytheherecoo cen the transactionsthatarelostinthetraltothe flaggingwill fosterdecline in interest country remainsbanksstimulatesome short term generally are regainedworld economy. There's no doubtratesacrossthematurity s pecunited behind ourdown the line.that further sh intary pol trum.Weexpectthefixed-rate iftsmoneThe seriousnessofthenear icy will be forthcoming in the nearhomemortgagetoaverage6.6 political leaders,iftermeconomicsituationwillfuture.percent in the fourth quarte and r, our military initia depend partly upon steps taken byOn the fiscal policy front, Con 1-year adjustableratemortgages econ ic policymakers athomegr quickly au rized $40 bishould beilab at less th 5 om esstho I ava lean tives appear to beand abroad. But developments onlion ofnew federal spendingforpercent the political, military and securitydisasterr ,newsecurityNAHB's forecast for the overall productive, and ifecoveryfron are even more importa tomeasuresandcounter-terrorismeconomy shows small declines in tsnt homeland securityboth the short-termlong-runactiv ies,andanadditional $15real GDPin boththethirdand anditvitality of the U.S. economy. Thebillionincash andloan guaran fourthq rtersof thisyear,and is restored.uashocks tothe economy probablyteesis slated to go to the airlinethat could q lifyasanofficial uacanbeshakenoffquickly if theindustry.Additionalappropria recession.so, thisld Evenshou be countryns u ed behind ourtions are bound toinclud a brief andmildsetback, and aremai nit follow,ll political leaders, if o military ini ing$18.4billionindefensethe fiscalandmonetarypolicy ur tiatives appeartobeproductive,appropriationsforFY2002thatstimulusinthepipelineshould andifhomelandsecurityishad already been requested by thehelppropeleconomicgrowth r tored.admin tion. T is all on top of es istra his NationalAssociationof Homethe previously enacted tax cut, andContinued on12 page"