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Taking Stock in America
Resiliency, Redundancy and Recovery
in the U.S. Economy
A Secure Future
The U.S. economy is shock-resistant,
not shockproof.
Surprise attacks that shut down transportation
systems, frightened consumers and created political uncertainty
dealt an undeniable blow. After September 11, however, our
worst fears never materialized. We avoided the cascade of
economic calamities some had envisioned. Our economy had the
strength and flexibility to prevent a day of infamy from becoming
an assault on the majority of Americans' livelihoods.
Terrorism striking on our own soil may
have initially made the United States appear vulnerable. Our
response, with military might overseas and economic muscle
at home, reinforced America's status as the world's greatest
power.
As a nation, we've launched not only
a war on terrorism but also a war to protect our way of life.
The tactics and the battleground differ from those of the
past. But the fight does not. It's a fight we'd already been
winning.
A dozen years ago, what happened on
September 11 would have been celebrated in the capitals of
the Communist bloc. Now, these former totalitarian nations
want to be like us. Thirty years ago, American forces retreated
from Vietnam, failing to defeat an enemy on the battlefield.
Yet a modernizing Vietnam now looks forward to forging a future
as a capitalist country. Sixty years ago, Germany and Japan
might have fought on the terrorists' side to destroy America.
Today, they've joined nearly every nation in backing our campaign.
America today has more friends around
the world and fewer enemies. The world marches to the beat
of a culture that sets the pace in music, movies and consumer
goods. Around the globe, nations are trying to emulate our
economic and political systems. The Heritage Foundation's
Index of Economic Freedom for 2002 shows a high tide for democracy
and capitalism.
The terrorist strikes were an attack
on our system. The immediate targets were the World Trade
Center, a symbol of economic power, and the Pentagon, the
center of military strength. The larger goal was to destroy
our system of democratic capitalism. It won't succeed. America
is too big, its people too free, its economy too strong and
too flexible—in short, too resilient.
Time and again, America has been tested,
either by crises at home or by enemies overseas. No matter
what the challenge—the Great Depression, the autocratic forces
of Germany and Japan in World War II, the communist foes in
the Cold War—we have risen above it.
And we will again.
—W. Michael Cox and Richard
Alm
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| Acknowledgments
"Taking
Stock in America" was written by W. Michael
Cox and Richard Alm. The essay is based on research
conducted by Cox, senior vice president and chief
economist, Federal Reserve Bank of Dallas. Sonja
Kelly provided important research assistance throughout
the course of the project. Also helping with research
were Charlene Howell and Fanying Kong.
Exhibit Notes and Data Sources
Exhibit 1
Annual GDP,
Consumption and Defense Spending per Capita
GDP: Introduction to Macroeconomics, Alan
C. Stockman (Fort Worth: Dryden Press, 1996);
"The Estimation of Prewar Gross National
Product: Methodology and New Evidence," Robert
J. Gordon and Nathan S. Balke, Journal of
Political Economy, February 1989; Bureau
of Economic Analysis (BEA).
Defense: Historical Statistics of the United
States: Colonial Times to 1970, Census Bureau,
1975; Office of Management and Budget (OMB); Census
Bureau.
Personal Consumption: Historical Statistics;
BEA.
Population: Historical Statistics; Census
Bureau. 1776 GDP was converted from 1994 dollars
to 2000 dollars using the chain-weighted price
deflator for GDP. Data before 1929 are GNP; after
1929, data are GDP. 1900–30 defense data are national
security spending as a percentage of GNP, calendar
year basis. 1940–2000 defense data are on a fiscal
year basis.
Exhibit 2
A Broader Economy
BEA.
Exhibit 3
Foreign-Born
Population in the United States
Census Bureau; Historical Statistics.
Canada includes Canada, Bermuda and Northern
America, not elsewhere classified. British
Isles includes England, Scotland, Wales,
Great Britain not elsewhere classified, Northern
Ireland and Ireland. South Eastern Asia data are
estimated.
Exhibit 4
More Population
Centers, Spread Out Nationally
Census Bureau.
Exhibit 5
Our National
Infrastructure
Interstate highways: Statistical Abstract
of the United States, 1989, 2000.
Public roads: Federal Highway Administration.
Dams: U.S. Army Corps of Engineers.
Bridges: Federal Highway Administration.
Inland water: Statistical Abstract,1977,
2000.
Airports: Statistical Abstract, 2000;
Bureau of Transportation Statistics.
Fiber-optic cable: "How the Fiber Barons
Plunged the Nation into a Telecom Glut,"
The Wall Street Journal, June 18, 2001.
Utility companies: County Business Patterns, 1970,
1999.
Cellular sites: Cellular Telephone Industry Association.
Cellular towers: Micrologic Research estimate.
Web sites and hosts: Hobbes' InternetTimeline,
www.zakon.org/ robert/internet/timeline.
ATM terminals:http://inventors.about.com/ library/inventors/blatm.htm;
www.cardforum. com/ html/news/071700_1.htm.
Petroleum pipeline: Statistical Abstract,
1972, 2000.
Natural gas pipeline: Department of Transportation.
Earliest data for bridges are for 1983. A cellular
site is a configuration of antennas that support
service; site data are as of June 30, 2001. Data
are the most recent available and vary from 1998
to 2001.
Capital Stock per Person
BEA; Census Bureau.
Exhibit 6
Knowledge Is
Power
High school and college education: Census Bureau.
Master's, doctoral and professional degrees: National
Center for Education Statistics.
Home computer and Internet access: Census Bureau.
Patents: U.S. Patent and Trademark Office.
Median age: Census Bureau. Professional degrees
includes D.D.S or D.M.D, M.D., and LL.B.
or J.D. degrees. 1950 LL.B. and J.D. degrees are
estimates based on data trends; 1955 number was
8,209.
Exhibit 7
Military Deaths
Defense Department.
Defense Spending
Historical Statistics; OMB.
Exhibit 8
Economic Downturns
National Bureau of Economic Research.
Data end in March 2001 because of questions about
how to measure the economy's performance for the
remainder of the year.
Exhibit 9
Deviations
from Trend Real Growth
BEA. Deviations are derived by applying a Hodrick–Prescott
filter to the log of each (inflation-adjusted)
series under observation —structures, goods, services
and GDP.
Exhibit 10
Transportation:
Scope and Safety
Motor vehicle travel: Historical Statistics;
Federal Highway Administration.
Air travel: Historical Statistics, Air
Transportation Association; Census Bureau.
Exhibit 11
Life Expectancy
at Birth
Centers for Disease Control and Prevention (CDCP);
Statistical Abstract, 2000.
Age-Adjusted Death Rates
Historical Statistics; Census Bureau; CDCP.
Deaths Due to Natural Causes
CDCP.
Natural Disaster Fatalities per 100,000
People
Statistical Abstract, various years; Historical
Statistics.
Deaths from Disease
Historical Statistics; Statistical Abstract,
various years; CDCP.
Photo Credits
Boston University, p.12
left;
Douglas E. Houser, U.S. Navy, Defense Department,
p.14 upper right;
Monster.com, p.17 lower left;
Insurance Institute for Highway Safety, p.19;
©2001 Garmin Ltd., p. 19 left;
Chuck Zovko, The Morning Call, p. 20;
Peter Dodge, NOAA, p.21 left;
McDonald's Corp., p. 24 left;
Randy Montoya, Sandia National Laboratories, p.
5 left, p. 6 center, p.13 lower right, p.15 left.
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