The Quarterly Bulletin of Statistics for the third quarter of 2001, released on Tuesday, shows graphically how badly the September 11 terrorist attacks affected the economy.

Visitor arrivals and spending, weak before the attacks, plummeted in their aftermath, and perhaps for the first time in decades, cruise visitors outnumbered air arrivals for the months of July, August and September.

Only someone who has been in a coma since September 11 would be surprised by that. But the depth of the decline is worrying. While air arrivals fell by 14.1 percent, spending by air visitors fell by 15.4 percent, meaning that visitors spent less individually than they did the same period the year before.

That is bad news since spending by visitors is the key indicator for the health of the economy. Put simply, if one visitor comes to the Island and spends $10,000, that is better for the overall economy than if nine visitors come and each spends $1,000 for a total of $9,000. Bermuda is getting fewer visitors and they are spending less as well.

Still, tourism does not make up the whole economic picture, and there has been considerable discussion about how international business is helping to keep the Bermuda economy moving.

However, the news there is not all good either. Company formations in the three-month period were down 33.6 percent, although the total number of companies registered was marginally up, presumably due to fewer companies being wound up. And the fourth quarter should show a dramatic rise in incorporations as a result of the new insurance companies that were formed on the Island in the wake of 9-11. But the overall trend is cause for concern, since the boom in insurance incorporations was caused directly by a one-off event which most people pray will not be repeated.

The other sector which has sustained the economy has been construction, where a combination of public and private sector building resulted in construction valued at $32.2 million being put in place — 5.2 percent more than in 2000. For the first nine months of 2001, $122.3 million worth of construction occurred, $17.1 million or 16.2 percent more than in 2000.

On the face of it, that is good news. What is worrying is that just $4.4 million in completely new projects were begun in the third quarter, and just $7.4 million were begun in the preceding three months, suggesting that the boom could well turn to bust some time next year.

To be sure, the Berkeley project will still be going ahead, but there are not many other major new projects being started now. One brighter aspect is the high rate of home construction. One hundred and ninety three homes were completed in the first nine months of the year — more than were finished in the whole of 2000 or 1999. That should relieve the housing shortage to some degree, but there is no indication of how long it will continue.

Finally, in another indication of the strength or weakness of the economy, the number of jobs fell in 2000 according to provisional figures from the Employment Survey. It would not be surprising to see that fall again in 2001, suggesting that at some point unemployment will rise, if it has not already.

Overall, the third quarter, even allowing for the shocking effects of September 11, does not paint a picture of a strong economy, and given that the effects of September 11 are still being felt, the Island is looking at a difficult first six months in 2002.