U.S. retail sales plunged in September, thanks to the September 11 terrorist attacks.

“Although the terrorist attacks were expected to restrain retail sales in September, the 2.4% plunge was much greater-than-expected and was the largest drop since January 1991,” says BMO Nesbittt Burns.

“The decline shows the effects of shaken consumer confidence and suggests that people were glued to their televisions following developments in the week after the attacks. Excluding autos, sales were off 1.6%.”

The big declines were in clothing, restaurants, and autos. Gasoline sales were up 3%, thanks to profiteering price spikes.

“What’s not yet clear, but highly important for the economy’s health, is how to apportion the blame between a cyclical decline in jobs and confidence, and the likely temporary shock effect of September 11,” says CIBC World Markets. “At least for the automotive data, early October anecdotal evidence of brisk sales suggest that much of the September decline was associated with the terrorist shock, and merely deferred activity into the following month. Even there, however, the data is muddied by the introduction of zero-rate financing incentives in October.”

CIBC says that the data keeps its call for real consumption at just over 1% in Q3, too little to offset another quarter of plunging business capital spending and a softening in residential building.

“Retail sales were expected to be dismal in September but they were even worse than feared. However, it does not tell us much about the ongoing trend until we see follow-up data for October. With confidence possibly firming, there are some reports that spending is snapping back this month, particularly in the auto sector. But, widespread job losses and ongoing anxiety are likely to limit a near-term recovery,” says BMO.