Sacramento, CA September 13, 2001 Businesses, investors, and consumers, wary of the financial turmoil following Tuesday's terrorist attacks in the United States, should carefully consider all of the evidence before taking any drastic financial action, according to two noted economists and the business experts at the California Technology, Trade and Commerce Agency (TTCA).
Financial markets and many American businesses remained closed on Wednesday following the devastating attacks in New York City, Washington D.C. and Pennsylvania. Analysts have since speculated that the resulting disruption of normal business activity could have a long-term negative impact on the economy.
However, the director of the UCLA Anderson Forecast in Los Angeles indicated that the damage would most likely be short-lived. "An economy, unlike a building, is an organic self-healing system, which doesn't tumble down when subjected to the shock of a terrorist attack on the World Trade Center," said Edward Leamer, who is also professor of business economics and Chauncey J. Medberry chair in management at the school.
TTCA Secretary Lon Hatamiya agreed with Leamer, adding that fear may be an even greater danger to the economy. "There may be a natural reaction of fear and panic regarding the state of the economy and the future of the financial markets," said Hatamiya. "However, the greatest danger to our economy is not the physical destruction wrought Tuesday, but any ensuing reluctance to invest based on the immediate havoc caused within the financial markets."
Chief economist Tapan Munroe of Applied Development Economics in Sacramento and Berkeley said he considers the long-term impact of the attacks "not that significant" for a $10 trillion national economy. "Although the economic damage in terms of loss of the World Trade Center runs into billions of dollars, the real danger is fear of the unknown," Munroe said. "The best thing we can do is to get back to a business-as-usual mode in our economy."