Prof. Roberts: Economy Remains Strong
John Roberts, Senior Associate Dean
Issue date: 10/1/01 Section: Perspectives
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The point is that nothing from Tuesday changed the economic fundamentals in any significant way. Thus there is no inherent reason why we should have the recession that so many are now saying is inevitable. But the level of economic activity is not determined by fundamentals alone – expectations also matter.
If American consumers and businesses keep faith in the economy and maintain their spending, the economy will be strong. But if we run frightened and, fearing a recession, cut back spending, reduce employment and restrict investment, then our fears will become a self-fulfilling prophecy. That would give the terrorists another victory, letting them inflict huge economic cost along with the unfathomable human cost they have already wrecked on us. We should not let that happen.
If American consumers and businesses keep faith in the economy and maintain their spending, the economy will be strong. But if we run frightened and, fearing a recession, cut back spending, reduce employment and restrict investment, then our fears will become a self-fulfilling prophecy. That would give the terrorists another victory, letting them inflict huge economic cost along with the unfathomable human cost they have already wrecked on us. We should not let that happen.