Wasn't that diversity of responses to 9/11 remarkable?
Doug
----
>Credit Suisse First Boston
>US Economics Digest
>9 September 2002
>
>Shocked But Undaunted
>
>American society has been subjected to monumental shocks in the last
>twelve months, beginning with the September 11 attacks and
>continuing with scandalous revelations and allegations about the
>leadership of key public institutions, both sacred and secular. It
>would have been reasonable to fear a collapse in public confidence
>and a severe curtailment in economic activity. As things turned out,
>the broad American household sector has held up reasonably well.
>Consumer spending has continued to advance at about the long-run
>historical average growth rate (Exhibit 2), with particular strength
>in the most long-lived financial commitments households make: cars
>and houses.
>
>In the narrow language of economics, consumption was supported by a
>fortuitously welltimed tax cut last summer, favorable energy cost
>developments last winter, and waves of mortgage refinancing last
>autumn and again more recently. In a broader language, we think the
>consumers' resilience is a reflection of freedom. America's
>diversity allows for non-correlated responses to common shocks.
>Freedom is the economy's greatest asset, and that's just as true on
>September 11, 2002 as it was on September 10, 2001.
>
>The aforementioned supports to consumption were helpful in buoying
>confidence at a time of labor market stress. Consumer confidence
>declined sharply after 9/11, but never reached the lows seen in
>prior recessionary periods. The combined shocks of Watergate and
>OPEC were apparently much more disconcerting than Osama and Enron.
>Confidence measures currently stand close to the long-term average
>(Exhibit 3), just like spending (we prefer to highlight the
>Conference Board Consumer Expectations index, as it correlates with
>actual spending better than other measures).