Experts say consumer confidence, as well as inevitable moves by business and government to beef up security, could prove crucial to the economic fate of technology companies in the coming months.

"This is going to change the way people do business for a long time, if not forever," said Sarkis Joseph Khoury, a professor of international finance at the University of California at Riverside.

Jolt to Spending

Khoury told NewsFactor that the nation's gross domestic product (GDP) is already seeing major losses from the national business slowdown that followed the attacks, as air travel, stock exchanges and some retail operations ground to a halt.

He said one immediate impact on high-tech -- particularly for those firms that market to consumers, such as computer makers -- will be a further jolt to spending habits. Consumer spending, which has long propped up the economy but which was already beginning to waver prior to the terror attacks, could see at least a short-term plunge.

"People are just not in the mood to go out and buy things right now," Khoury said. "This is having an extremely negative impact on personal spending."

Gauging Public Reaction

Purdue University economics professor Gerald Lynch told NewsFactor that the insurance and airline industries are likely to take the biggest hit in the coming months, as rebuilding begins and travelers remain concerned about air safety. But all sectors will eventually be affected by the U.S. government's reaction to the attacks and the long-term effects on the public psyche.

"If this shakes consumer and investor confidence significantly -- and I would need a crystal ball to predict that -- it could take an already weak economy into a downturn," Lynch said. "The effect on confidence will turn to a large extent on the events of the next week or so."

Rob Enderle, vice president and research fellow with Giga Information Group, said that one consequence of last week's events is likely to be a prolonged wait for improvement in the ailing tech sector, which had been hoping for a boost from the coming holiday shopping season.

"It depends how long the event itself continues [as to] how big the impact is," Enderle told NewsFactor. "However, it is very likely that while this may not postpone the recovery -- expected in 2003 -- it could make a recession itself much more painful than it otherwise would be for this segment until that recovery." (continued...)

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