Year 2001: Economy endures 9/11 attacks
- A mild, eight-month recession begins. In March, a recession emerges that the National Bureau of Economic Research later declares lasted eight months. The start of the recession follows a decade of expansion.
- A major tax reform law passes. On June 7, President George W. Bush signs a $1.35 trillion tax package into law. Among the changes, the law will cut the top tax rate from 39.6 percent to 35 percent and create a new bottom tax rate of 10 percent. The law will eventually double the child tax credit from $500 to $1,000. In addition, the new rules will gradually reduce the estate tax and eliminate it in 2010.
- Terrorists attack the U.S. on Sept. 11. They hijack four commercial airliners, crashing two of them into the World Trade Center and another into the Pentagon. The fourth crashes in a field in Pennsylvania. Almost 3,000 die.
The tragic event does not cripple the U.S. economy, although the airline and the insurance industries struggle in the wake of 9/11. A year later, a report by the Congressional Research Service says, “The direct effects of the attacks were too small and too geographically concentrated to make a significant dent in the nation’s economic output.”
- In October, the Federal Reserve reduces its benchmark federal funds rate to 2.5 percent, bringing the overnight bank lending rate to the lowest level in 39 years. It’s the ninth consecutive cut to the federal funds rate in the Fed’s attempt to pump up the economy.
— Leslie McFadden