The important point is that the same figure was up 0.4 per cent in August, which reaffirms the belief that terror attacks on the US on 11 September have had a devastating impact on the US economy.

Retail sales is an important parameter, which measures consumer confidence and consumers ability to spend. Large consumer spending can create demand, which can
lead to larger industrial production and employment.

From individual segments, the sharpest drop came about in clothing stores, which was down 5.90 per cent, restaurants and bars down 5.10 per cent and car dealers 4.60 per cent. For the entire third quarter ended 30 September 2001, retail sales dropped 6.90 per cent on an annualised basis. Economists now fear that their earlier estimates of a 1-per cent drop in US GDP is likely to go out wrong by a huge margin.

However, the National Bureau of Economic Research, widely recognised as the arbiter of US business cycles, insists: Economic data remained inconclusive as to whether the US had slipped into a recession. Incomes in the US has not shrunk at all and employment has not fallen by the amount typical of a recession.

There are other indicators, which underline the opinion that the US is still not in a recession. These are:
1) The consumer confidence index, based on a survey conducted on 250 households by Michigan University, actually rose to 83.40 in October in comparison to 81.80 in September, out-beating economists expectations of a 5-point drop.
2) The wholesale prices in the US rose 0.4 per cent in September, according to the labour department.