Twelve months after the events of September 11th, Kathryn Holmquist takes stock of that day's impact on our lives.

We burned hot and bright. Maybe too hot, too bright. An entire generation learned to live beyond its means, to live fast, drive fast, eat fast, talk fast. Our saviour was information technology, and our totem was the mobile phone.

The economy was our sun - and now our wings are burnt. We're afraid to fly, literally and figuratively. Risk-taking no longer seems an economically sensible option.

When I wrote those words a year ago, we were all trying to process one of the most traumatic events of our lifetime. We felt as though the world had changed, and we with it.

The attack on the world's economic centre also damaged our emotional centre. We seemed to be entering a new age of uncertainty. The terrible events of September 11th coincided with the ending of Ireland's boom years, exacerbating our anxiety. But a year on, has the world really changed? Are we any different in our attitudes? Yes and no.

Our current fears are not so much global terrorism as the personal terrorism of child killings, sexual assaults on toddlers and the tragedy, a few days ago, of an 11-year-old dying after experimenting with aerosols.

Yet we have profoundly changed. As Exchequer returns show Government spending out of proportion to income, and as the Combat Poverty Agency urges us to reassess our priorities, we are in a new psychological space.

Economically, September 11th turned the tide. The consumer confidence index fell dramatically to minus 14 per cent in October 2001 following the attacks, down from a high of plus three per cent as late as July 2001. But it has since clawed its way back to minus three per cent - a sign that we are still feeling cautiously optimistic.

We are not as cocksure as we were in the high-spirited summer of 2001 - only a year ago, yet so far away. Our Taoiseach has only recently admitted that the original "Bertie Bowl" may now be unaffordable. In my article about September 11th last year, Dr Maureen Gaffney, chairwoman of the National Economic and Social Centre, described Ireland as an "infallible adolescent setting out in the world" that had been given a rude shock.

It has taken a while for the shock to sink in. A year ago, Dr Gaffney urged us to remain positive and not "talk ourselves into deep recession". And, a year later, positive we have remained - almost blindly so. Gaffney interprets the general election result as a direct expression of our collective decision to believe that the economic situation was going to be manageable, if not as robust as before. The fundamentals were right, even if that meant handling a blip on the economic radar screen.

Now Ireland Inc has grown into a 22-year-old who has to let go of the illusory invincibility of adolescence and face the fundamentals. A Government which prided itself on cutting taxes while still promising improved public services has revealed itself as suffering from a collective fantasy syndrome. Before September 11th, and even as recently as last May, we believed them.

"Recent developments have yet to sink in," says Dr Gaffney. "We haven't yet seen the psychological effects of the latest budgetary constraints." We haven't even begun to deal with the hard choices we will have to make - the general election came too early for that debate, as it is only now that the economic effects of September 11th are affecting Government policy. "We will be faced increasingly with ethical choices, so we will need to reframe our ethical values," she says. Yet to achieve this, Dr Gaffney believes, we will need to throw out our arrogance while hanging on to those positive feelings that powered our adolescent illusion of invincibility.

Cynicism and negativity are creeping in, according to Gerard O'Neill, managing director of Amárach, a consulting group which predicts consumer trends. The Exchequer's position of skirting close to the red unless it reduces spending has been cloned in the private lives of the most influential consumers. The thirtysomethings, who have known nothing but boom times, have run up a debt overload, spending 5 per cent more than they earn - a dangerous and risky choice.

US consumers, by comparison, are now spending 5 per cent less than their income and this trend has yet to reach us.

The leisure sector used the introduction of the euro to increase prices, resulting in consumer inflation as high as 13 per cent in restaurants and pubs. Other prices have also risen, hidden by euro conversion, and this has contributed to a credit boom that will have to be paid off sooner rather than later.

The euro backlash has begun. Greek consumers held a "no-buy day" strike on Tuesday, and this kind of protest is likely to reach these shores, O'Neill believes.

History will show that the euro, and not September 11th, will have had the most profound effect on consumer psychology, O'Neill predicts. The two events acted in synergy, with the World Trade Centre attacks prompting a spending spree at Christmas 2001 - as Dr Gaffney predicted. When the euro arrived, people were still on a high; and it is only now, with the economic effects of September 11th trickling down to our personal lives, that we are feeling betrayed.

O'Neill also forecast last year that people would defer big spending on cars and houses. New car sales are indeed down, and the housing market is stabilising as more consumers choose to feather their nests, rather than move them.

A year ago, O'Neill stated the best investments would be in pampering and DIY. We would be battening down the hatches and looking after ourselves.

He was proved right. A new B&Q superstore in Dublin recently returned the best profits of any B&Q on these islands in the company's history, while beauty therapy businesses spearheaded by Celia Larkin and Claire McKeon have flourished in the last year.

Religion was the major investment advised by the Henley Centre's managing director Martin Hayward in the wake of September 11th. Rev Gordon Linney, Church of Ireland Archdeacon of Dublin, saw more young people flocking to church services, as they hungered to make spiritual sense of events.

This long-term trend, as people become disillusioned with the spend-now/think-later attitude of adolescence and grow into a position of long-term values, is yet to be proven. But my money's on it.