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By many measures, Islamic State is a weakened and demoralized force. After months of U.S.-led bombing and defeats by local troops in Iraq and Syria, the group lost thousands of its fighters, was forced to relinquish significant territory and has been cut off from routes it used to move weapons and reinforcements.

But the group remains a potent threat in other ways, especially in its ability to inspire self-radicalized militants to carry out attacks in the West and elsewhere.

The man accused of carrying out a bombing in New York on Sept. 17 appears to have been inspired — if not directed — by the leaders and ideologues of al-Qaida and IS. The 28-year-old suspect, Ahmad Rahami, wrote admiringly in a journal about al-Qaida leader Osama bin Laden, American-born radical Islamic preacher Anwar al-Awlaki — who was killed in Yemen by a U.S. drone strike — and leading Islamic State strategist Abu Mohammad al-Adnani.

In one section of his journal, Rahami references a message in May by al-Adnani, urging Islamic State supporters to carry out attacks in the West during the holy month of Ramadan in retaliation for U.S.-led airstrikes against the group’s strongholds in Iraq and Syria. Rahami wrote that al-Adnani had issued a clear directive to “attack the ‘kuffar’ in their backyard.” (In Arabic, “kuffar” refers to unbelievers or those who reject Islam’s teachings.) U.S. authorities recovered the bloodstained journal after a shootout with police in New Jersey on Sept. 19, which led to Rahami’s arrest.

There are still many unanswered questions about Rahami’s motivations, whether he met militants who helped radicalize him on several trips to Pakistan, or if he received training in bomb-making. If he was swayed by al-Adnani’s appeal to undertake the New York attack, Rahami would be the latest example of a self-radicalized militant who heeded the calls of IS or al-Qaida leaders to strike at targets of convenience in the West.

Over the past six months, Iraqi government forces, with U.S. air support, forced IS out of the western Iraqi cities of Ramadi and then Fallujah. But as it lost territory in Syria and Iraq under pressure from Western bombing and local military forces, the group has tried to project strength by organizing or inspiring attacks around the world.

The IS campaign to reassert its influence peaked during Ramadan, when operatives and sympathizers carried out a spate of bombings, mass shootings and stabbings across Europe, the Middle East and Asia. Many of the attackers were radicalized “lone wolf” perpetrators inspired by and acting in the group’s name, but without taking orders directly from its leaders.

These attacks spread fear and allowed IS leaders to show perceived strength to make up for their battlefield losses. They also signaled that the group would revert to its roots as a jihadi insurgency, bent on large- and small-scale attacks that instill fear but do little to help the militants keep control of territory in Syria and Iraq. IS also shifted its propaganda to appeal to potential lone wolf attackers, who could amplify the group’s reach. In an audio message released May 21, two weeks before the start of Ramadan, al-Adnani, who at the time was the leading IS spokesman, urged sympathizers to carry out attacks in the West and to turn the holy period, “with God’s permission, into a month of pain for infidels everywhere.”

Despite the spate of high-profile attacks during Ramadan, IS suffered a series of surprisingly quick and relatively bloodless defeats this summer, both in Syria and in the Sunni heartland of Iraq. It is a much weakened group than it was even a year ago — and it is unlikely to be able to hold on to significant territory. In late August, IS lost the Syrian border town of Jarabulus to U.S.-backed Kurdish fighters. It was the last IS outpost near the Turkish border, which had enabled the group to bring in recruits, money and supplies to its territory, especially its de facto capital in Raqqa.

The loss of territory has been accompanied by the high-profile targeting of IS leaders by U.S. airstrikes, which led to the assassination of al-Adnani, the top spokesman and strategist, and a senior military commander named Omar al-Shishani. This latest forfeiture of territory in Syria and Iraq; the drying up of routes for foreign fighters to reach the self-declared “caliphate;” and the assassination of senior operatives like al-Adnani and al-Shishani underscore how IS is under siege in a way it has never been before.

But the jihadi group still has the capability to attract recruits, raise funds through extortion and illicit oil sales, secure weapons and dispatch sympathizers to carry out attacks abroad. Ironically, as it gets weaker on the ground, IS will have less to lose by unleashing more terror outside of Syria and Iraq.

U.S. military officials say the group’s fighting force has been cut by half from a year ago — it now has as few as 16,000 combatants. “The number of fighters on the front line has diminished. They’ve diminished not only in quantity, but also in quality,” Lt. Gen. Sean MacFarland, then-commander of U.S. forces against IS, said at a news conference in Baghdad last month. He added, “We don’t see them operating nearly as effectively as they have in the past, which makes them even easier targets for us.”

Even as it lost territory and leaders, U.S. security officials warned that IS still had the ability to inspire or organize attacks in the West and across the world. Intelligence officials cautioned the group would pose an even greater threat, as it gets weaker, because its foreign sympathizers might be motivated to carry out attacks in the West if they are unable to reach the cut-off “caliphate” in Syria and Iraq.

“It is our judgment that ISIL’s ability to carry out terrorist attacks in Syria, Iraq and abroad has not to date been significantly diminished,” Nicholas Rasmussen, director of the U.S. National Counterterrorism Center, told the House Homeland Security Committee in July. He added that IS’ “external operations capability has been building and entrenching during the past two years, and we do not think battlefield losses alone will be sufficient to degrade completely the group’s terrorism capabilities.”

As it loses strength and larger chunks of its self-proclaimed “caliphate” in Syria and Iraq, IS will lash out with more attacks around the world. And governments in the West and the Middle East will need to adapt to an enemy that can turn battlefield setbacks into new terror.

Mohamad Bazzi is a journalism professor at New York University and former Middle East bureau chief at Newsday. He is writing a book on the proxy wars between Saudi Arabia and Iran.

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