Car dealer Robert Reichert has a problem, and he's not sure what's causing it.

        It's not a lack of sales from a slowing economy — it's just the opposite. He's running out of vehicles to sell in the face of one of the best sales months in the 26-year history of his Kenwood Dealer Group Inc.

        “The best year we did before was 18,093 units, and we're on pace to do close to 21,000 this year, unless we fall apart in November and December,” he said.

        Despite growing layoffs nationally and in the Tristate after the Sept. 11 terrorist attacks, car sales have been one of the bright spots in a economy seen increasingly slipping into recession.

        So that leaves Mr. Reichert and other businessmen wondering: What is this? The beginning of a protracted recession or a short dip such as in 1990-91?

        “I think we're in a recession,” said Richard Stevie, economist with Cincinnati Gas & Electric. “My gut feeling is we'll start to see a rebound sometime around the middle of next year.”

        A flurry of zero, or no-interest, financing incentives this month by auto manufacturers has fueled car sales, but Mr. Reichert isn't ready to pop the champagne corks just yet.

        When the zero-rate financing plans expire or are cut back next month by the automakers, Mr. Reichert said, dealers will find out “did we pull business ahead from this winter, or did we motivate people who were hesitating to buy?

        “If it's really pulling business ahead, we'll have a disaster in November and December.”

Uncertainty hurts

        The great unknown is just how lasting are the effects of the Sept. 11 terrorist attacks on America's economic psyche.

        “The consequence of current events is we don't know how long term or frequent this threat of terrorist attack is,” said Chris Waller, an economics professor at the University of Kentucky in Lexington.

        “The more we think of it as somewhat permanent, the more uncertainty it creates in future plans and payoffs on things. Uncertainty always deters action, whether it's buying a new car, buying a new house or building a new plant.”

        That sentiment was echoed by Don Lane, president of Makino, the Mason machine tool company, which has cut about 50 jobs in the face of slowing sales.

        “If Osama bin Laden is caught, the economy could spring back quickly. It was close to a turnaround before Sept. 11,” he said. “If they can't find him or there's another terrorist incident, the economy could slow further. We'll just have to wait and see.”

        The past offers little guidance for the future, economists say.

        Just more than a decade ago, the U.S. economy slipped into recession while the United States launched the Persian Gulf War.

        “In 1990 and 1991, we had an overbuilt commercial real estate market, and the banks had overextended themselves a bit,” Mr. Stevie said.

        “This go-round, leading up to Sept. 11, we weren't faced with that kind of situation.”

        While the banking industry is in better shape, technology and telecommunications companies have been forced to make sharp cutbacks, he said.

        On the other hand, the Sept. 11 attacks have taken a heavy toll on the nation's transportation industry, said George Vredeveld, an economist at the University of Cincinnati.

        “We've got two really big transportation industries in Cincinnati,” he said — GE Aircraft Engines in Evendale, with about 8,000 employees, and the Cincinnati/Northern Kentucky International Airport, where about 20,000 are employed.

        GEAE already has indicated that it plans to cut about 800 jobs in Greater Cincinnati. And Delta Air Lines, which dominates the airport, expects to cut 800 jobs in the area.

        But some Cincinnati-area companies that had relied on the transportation industry a decade ago aren't as dependent on that market today.

        Hi-Tek Manufacturing Inc., a Mason company that machines engine components for GE and other jet-engine makers, learned its lesson in the last recession.

        Cletis Jackson, president, said the company had to cut its employment from about 90 to 60 when GE and others cut back on orders.

        Since then, Hi-Tek has diversified its business to include power-generation equipment suppliers.

        While its commercial aerospace business is weakening, Hi-Tek's overall sales remain strong. Hi-Tek has grown to 185 employees and is looking to hire 20 more, Mr. Jackson said.

        In the past decade, most businesses have become leaner and more efficient, Mr. Vredeveld said.

        “Fundamentally, this economy is very, very strong. Most companies are lean, very productive,” he said.

        “One thing in this recession that is very different from the early '90s is the Fed started slashing rates even before the economy even appeared to go into a recession,” Mr. Waller said.

        During the 1990-91 slowdown, Mr. Vredeveld said, “the Fed was slow on the trigger ... because government had huge deficits, and they were looking at inflation numbers that were pretty high. Now you've got small surpluses and very low inflation.”

        That gives federal economic policy-makers much greater freedom to act, he said.

        While Sept. 11 has probably pushed back the nation's recovery into the middle of next year, Mr. Vredeveld said, “I think, over the past 10 years, our economy is less susceptible to sharp swings than it used to be.”

        “We're going to take some pretty good short-term hits,” he said. “But by the third quarter of next year, we'll find we're back to where we would have been ... and then go from there.”

        Mr. Reichert echoes that sentiment: “I don't think Cincinnati ever really has the big dips nor does it have the high peaks, because you've always had a fairly steady economy.”

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