Washington, DC, Sept. 12—The U.S. could very well be pushed into recession should the economy's driving force—consumer spending—stop in the wake of terrorist attacks on the nation's business and government hubs, according to private economists.

The attacks on New York City and Washington, DC magnified economists' greatest fear and one of the biggest dangers facing the economy—that consumers, who have been the main force keeping the economy afloat, will sharply cut their spending and throw the country into its first recession in 11 years.

“We need to wipe earlier economic forecasts clear off the table and put a new one together,” said Sung Won Sohn, chief economist at Wells Fargo. “Hopes are gone for a recovery in the fourth quarter.”

Even before the attacks on the World Trade Center and the Pentagon, the economy was in bad shape, showing the toll of a yearlong slump. The economy barely grew in the second quarter, expanding at an annual rate of just 0.2%, its weakest performance in eight years.

And last week's news that the country's unemployment rate shot up to 4.9% in August, as job losses in manufacturing climbed above one million, rekindled recession fears and made some economists worry that the current quarter could turn out to be a lot weaker than many had thought.

“Given that they hit the nerve center of a lot of markets and businesses ... I'd be surprised to see any real economic recovery before March of next year,'' said Clifford Waldman of Waldman Associates.

Worries over whether consumers, whose spending accounts for two thirds of all economic activity, will hang tough or collapse could be exacerbated depending on how financial markets react when they are opened.

The major stock exchanges were shut down Tuesday and officials said that the New York Stock Exchange, the Nasdaq Stock Market and the American Stock Exchange would remain closed until Friday at the earliest.

But President Bush sought to bolster the nation's confidence. “Our financial institutions remain strong, and the American economy will be open for business as well,'' he said in his TV address Tuesday evening.

Treasury secretary Paul O'Neill, who was in Japan when the attacks occurred, also expressed confidence the United States' financial system would weather the current crisis.

“Our nation's financial markets are strong and resilient,” O'Neill said. “In the face of today's tragedy, the financial system functioned extraordinarily well, and I have every confidence that it will continue to do so in the days ahead.”

Against the backdrop of the new uncertainties facing the economy, analysts say there's a much greater chance that the Fed might opt to cut short term rates for an eighth time this year—before its next scheduled meeting on October 2.

“I think the odds are high that they will respond to this by lowering interest rates before the October meeting,” said Mark Zandi, chief economist at Economy.com.

“When it's all said and done, the economic impact of the attacks will be determined by how people and businesses respond,” Zandi said. “If they don't panic and cut spending and they work through this, then this will be just an asterisk in our economic history. But if consumers and businesses freeze, it will have a very debilitating impact and the attacks will go down in history as the main cause of the 2001 economic recession.”

But economist Ken Mayland of ClearView Economics said he is optimistic that the fallout will be temporary. “I think consumers are going to be in the very short run glued to their tubes and stay close to home, but I think that will pass very quickly and that normal business activity will resume,” Mayland said.

Shortly after the attacks Tuesday, the Fed announced that it stood ready to pump extra money into the economy if needed to try to avert a full blown downturn.

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