Five weeks ago, as many observers noted, the U.S. economy approached a fork in the road. A mild uptick in new orders for manufacturing goods, positive signals from the Index of Leading Indicators, and continued stimulus from the Fed all pointed in the direction of an impending turnaround. But low levels of business spending, poor earnings reports and the stagnation of the stock market suggested a continued slide into recession.

The terrorist attacks have changed all that. The issue for most analysts is not whether the economy is in recession, but how long and painful the downturn will be. Every piece of news fits nicely into the emerging picture of economic decline.

But is it really as simple as that? The scenario of four renegade aircraft within the space of a few hours bringing down a $10.2 trillion dollar economy is dramatic and compelling. It's also a bit far fetched. As painful as the losses suffered on September 11 were, the case for extending their effects into the pocketbooks of every American is quite weak.

The real story is that the U.S. economy is slipping into recession all on its own. The uncertainty and anxiety of the terrorist attacks certainly hasn't helped matters, to be sure. The temporary interruption of ordinary commerce, not to mention the hits on individual industries like airlines and insurance, have been felt by many of us. But at its root, the causes of the continued downturn in the national economy can be traced to events that are much more ordinary.

How much longer, for example, could we expect the economy continue to shed jobs before the spending plans of consumers would be impacted? The timing of the data collection for the September employment report made it unaffected by the disruptions of the New York and Washington attacks, yet its grim message portrayed a weakening economy nonetheless. With indebtedness rising and savings rates at historical lows, the last leg holding up economic growth -- consumer spending -- was faltering before our eyes.

When the smoke clears and economists dissect the events precipitating the 2001 recession, their fingers will probably not point to Afghanistan, but rather at ourselves. By every indication, the bill for the "irrational exuberance" that Alan Greenspan deplored in 1996 is coming due today. The failure of technological advance to actually deliver on the sky-high expectations embodied in stock prices has produced an environment where businesses of all kinds find their access to capital blocked. The list of companies whose fortunes have fallen hardest is dominated by producers of physical, technological, and intellectual capital goods that other businesses can no longer afford.

Coming off the boom years when the cash spigot was turned on full, the adjustment has been harsh indeed. For the sake of economic efficiency, it was also necessary. The task for Congress and the Fed is to make sure that it is no more painful than it needs to be.