The Fear Economy
By PAUL KRUGMAN
The American economy is usually quick to shrug off the effects of disaster. When Hurricane Andrew swept through South Florida in 1992, and again when the Northridge earthquake struck Southern California in 1994, the property damage was immense and the lives of millions of people were disrupted for months thereafter. Yet few economists thought of either event as a threat to national prosperity, and if you look at a chart showing the growth of gross domestic product, it's quite hard to see any effects.
Will it be different this time?
Although Sept. 11 was a human tragedy on a scale far greater than any of America's recent natural disasters, in monetary terms the immediate loss was not much more than one might have expected from a severe hurricane or earthquake. Yet many people fear that the terror attack, unlike a hurricane or an earthquake, will have dire consequences for the economy -- indeed, that it may even tip the world into recession. And though they are probably wrong, they could be right....
[The full article is available at <http://www.nytimes.com/2001/09/30/magazine/30ECONOMY.html?pagewanted=all>.]