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Great article in the WSJ on how the economic impact of 9/11, looking back 5 years, has been far less severe than expected. Nothing I haven’t said before, but finally the Journal agrees with me that the “Fear Factor” is weighing more on the economy than actual economics.

The economy is, by any measure, 10-15% more efficient after absorbing that shock, and corporate profits are up a cool $500b (70%) since 9/11—an amount equal 4-times Iran’s entire GNP, or the entire GNP of India (with 1 billion people):

And how is the S&P faring on the 5-year anniversary, after corporate earnings have grown a compounded 10% per year since? It’s up a whopping 17%. The Dow is up 16%, the Nasdaq is up 23%. Only the NYSE is in the ballpark (so far) posting a 38% gain over that time.

S&P 500 Index (NYSEARCA:SPY) vs. NASDAQ 100 Trust Shares ETF (QQQQ) vs. Dow Jones Industrial Average [DJIA] vs. iShares NYSE Composite Index ETF (NYSEARCA:NYC)—9/1/2001 to 9/11/2006

Were it not for the 9/11 tragedy, what would the natural stance of the market really be?

Source: Fear Factor-9/11's Lasting Legacy