If history is any guide, the anticipated US retaliation for the Sept. 11 attacks on New York and Washington will not have a substantial impact on the US$10 trillion economy unless a protracted ground war follows, business and economic scholars said.
However, enhanced government spending is likely to give a boost to parts of the economy, experts said. And a new emphasis on security and intelligence may skew those benefits to information technologies rather than traditional munitions and materiel suppliers, experts said.
Wars have in the past helped pull the US out of recession, as government spending on weapons and supplies has provided stimulus, academics said. But not since the Vietnam conflict has any military engagement been long or extensive enough to have any substantial economic effect, they said.
"This is a blip in terms of the macro economy," said Daniel Hamermesh, an economics professor at the University of Texas. "I could see a different scenario if we send in 100,000 ground troops and get bogged down in Afghanistan like the Russians did, but I can't see that happening."
But Congress is preparing to spend as if war had broken out and one Democratic lawmaker was even suggesting returning to a relic of World War Two -- war bonds.
Representative John LaFalce, a New Yorker and the top Democrat on the House Financial Services committee, said on Tuesday he will ask Congress to let the Treasury Department issue special bonds to fund recovery, relief and military efforts in connection with the attacks, which left nearly 6,000 people dead or missing.
While it is tough to predict the extent of the US military response, government officials have promised a sustained effort.
Sarkis Joseph Khoury, a professor of finance at the University of California at Riverside, estimated government spending would rise by between US$60 billion and U$100 billion.
"That will add quite a bit to economic activity," he said.
Perhaps more significant to the economy is the effect on stock markets, said Fariborz Ghadar, of the Smeal College of Business at Penn State University. The uncertainty of war prompted big declines in stock markets during both the Vietnam War and Gulf War, he said.
The Dow Jones industrial average tumbled 684.81 points, or 7.13 percent on Monday, to end at 8,920.70, its biggest point loss ever and its lowest close since late 1998.
At the same time, military success can provide a big psychological boost to markets, Ghadar said.
"If in fact we see some resolution somewhere, then we're going to see a rebound very quickly," he said.
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