In response, businesses slashed production, and the resulting declines in incomes amplified the cyclical downturn. Real gross domestic product did not grow in the second quarter and contracted in the third.
A coincident deceleration in activity among the world economies was evident over the past year, owing, at least in part, to the retrenchment in the high-technology sector and the global reach of the capital markets in which the firms in that sector are valued and funded. However, before the terrorist attacks, it was far from obvious that this concurrent weakness was becoming self-reinforcing.