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2002 News Releases
For immediate release:
April 11, 2002
Media contact:
James Hoard
Phone: (214) 922-5307
e-mail: james.hoard@dal.frb.org
Dallas Fed Takes
Stock in America
DALLAS—The
vitality and resilience of the U.S. economy have been key to America's
current rebound from the recession and the September 11 tragedy,
according to the Federal Reserve Bank of Dallas' 2001 annual report
essay.
In "Taking Stock in
America: Resiliency, Redundancy and Recovery in the U.S. Economy,"
Senior Vice President and Chief Economist W. Michael Cox and co-author
Richard Alm evaluate the economy's central role in these difficult
times.
"Our ability to handle
adversity stems from several economic strengths that most of us
take for granted. Size adds to stability and durability. Diversification,
redundancy and decentralization help keep the system functioning
even when key sectors are under stress," the essay says.
"The U.S. economy…provides
the resources and know-how to increase our security and safety,
areas of greater concern now," Cox and Alm write.
Diversification, decentralization
and redundancy make it increasingly difficult to cripple the economy.
In 1947, three sectors—manufacturing, retail trade and agriculture—made
up nearly half of the U.S. economy, according to the authors.
Today they generate only a quarter of output, and new industries
such as computers and biotechnology have expanded the economic
pie. These new industries have been essential to providing the
protection of redundancy through overlapping and competing systems.
When industries such as travel were hard-hit after the terrorist
attacks, diversification and decentralization helped keep economy
afloat.
Additionally, the economy
continues to recover faster with each challenge. If history plays
out, the current recovery time should be relatively brief. In
the past quarter century, the economy has been in recession less
than 10 percent of the time, compared with 40 percent of the time
from 1879 to the start of World War II and 20 percent since 1953.
Cox and Alm conclude
that the terrorists' attempt to destroy America's system of democratic
capitalism won't succeed. "America is too big, its people too
free, its economy too strong and too flexible—in short, too
resilient."
The 2001 annual report
essay can be found on the Dallas Fed web site, http://www.dallasfed.org/fed/annual/2001/index.html
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