After Iraq invaded Kuwait in the summer of 1990, the fall in the index was more pronounced. It dropped 13 percentage points, to 76.4, and continued to fall into the mid-60s as the US prepared for war. The resulting uncertainty helped to send the economy into its last recession.
The parallels to today are striking. As was the case a decade ago, US leaders are openly discussing overseas attacks, and some of the world's richest oil regions could be involved. In addition, consumer confidence has already been dropping, as a long economic expansion seemed at its end.
Last week, the Michigan index fell to 83.6, its lowest level since 1993, reflecting the results of a survey done before Tuesday's attacks. Less than a year ago, the index stood at 107.6, near its record high.
Weaker outlook
Given all the new uncertainty, and the billions of dollars of profits and wages lost after the attacks, consumers are almost certain to pull back even further, at least in the near term, economists said. "Following the terrorist attack, we should expect an even weaker outlook," said Richard T. Curtin, the director of Michigan's consumer survey. "The possibility the economy will fall into an outright recession has grown substantially."
Still, economists cautioned, the long-term economic effects of a disaster can often appear to be much greater in its immediate aftermath than they actually become.
Over the last 25 years, Britain has been the site of many bombings, mostly carried out by the Irish Republican Army. But even the largest -- in train stations or crowded neighborhoods -- had only the smallest effects on the nation's overall economy.
"The actual impacts on confidence and activity were very short-lived and almost imperceptible," said Walker of Oxford Economics. "It is surprising how relatively quickly people started to travel on the Underground again and go to train stations again."
But none of the terrorist attacks in Britain killed anything like the number of people that this week's attacks did, Walker said. And Britain, which had experienced both World War II air attacks and regular terrorist incidents more recently, had less of a sense of peace than the US did before this week.
That sense of peace and stability, Puchalla of Moody's said, is one of the reasons Americans have been more willing than people in other countries to spend their income and go into debt.
RSS