American Express Financial Advisors' Chief Economist Dan Laufenberg says many sectors of the U.S. economy are already are in recession. (MPR Photo/Bill Catlin)

American Express Financial Advisors' Chief Economist Dan Laufenberg says many sectors of the U.S. economy are already are in recession. "The manufacturing sector was in a recession, you've had a profits recession, you basically had many sectors of the economy were already there. One thing that sort of saved us were consumers," Laufenberg said.

Consumer spending accounts for two-thirds of U.S. economic activity, and despite a spate of bad news about the slowing economy and accelerating layoffs, consumer spending has largely held up.

Even before the attacks on Tuesday, and perhaps more so now, all eyes are on consumers like Kim Weber. But during a cigarette break in downtown Minneapolis, she's not even thinking about her finances. "I'm just still in shock over the whole thing. You see this in other countries all the time, but you never think... you think it's never going to happen here. So, actually, money is the last thing on my mind now," Weber said.

But others, like Susan Daly do plan to rein in their spending. "Definitely. (I'll) spend wisely if I do, keep more of my own cash on hand."

"It's going to take a month or more for us to see the full impact on consumer confidence. But at this point, no one expects it will be good." - Tom Stinson State Economist

Loosbrock says he's generally an optimist, and he's not alone. Economist Dan Laufenberg says there's plenty of reason to think he's right. "Consumers are nervous, they're uncertain, they're going to pull back. The question is how long do they stay in that state? And I would argue, that as long as they have the wherewithal to spend, they will come back and they'll come back a lot sooner if they have the money to spend than if they don't," according to Laufenberg.

Laufenberg says lower interest rates, tax-rebate checks and gains in real wages mean consumer spending will resume sooner rather than later.

But major Minnesota companies still face perils. Northwest Airlines, with one of the state's largest private payrolls, and already struggling from declining business travel, has been grounded like the rest of the industry. Spokeswoman Kathy Peach says it's too early to gauge the impact on Northwest's business. "But certainly it's a big hit when you don't operate a normal schedule and you're not collecting that revenue from those travelers," according to Peach.

Northwest lost millions each day during a pilots strike three years ago, and Peach says the airline is probably losing even more now. Even after flights resume one survey suggests businesses will cut back further on travel in coming weeks, exacerbating the existing industry's problems. For example, Twin Cities based Best Buy, the nation's biggest consumer electronics retailer, says it has grounded all staff for two weeks.

Insurers are also likely to bear some of the financial brunt of the attacks. The Insurance Information Institute says it expects the destruction of the World Trade Center in New York to be the most costly man-made catastrophe once claims are totaled. Officials with the St. Paul Companies say the firm faces insurance losses in the disaster, but stress it's too soon to predict the financial impact on the company.

At a minimum, State Economist Tom Stinson says the attacks caused a serious shock to the national psyche. "Tuesday's events didn't help the economy any. It's going to take a month or more for us to see the full impact on consumer confidence. But at this point, no one expects it will be good."

Bill Catlin covers business and economic issues for Minnesota Public Radio. Reach him via e-mail at bcatlin@mpr.org.