The Potential Impacts of Recession and Terrorism On U.S. Cities

Alan Berube and
Alan Berube Interim Vice President and Director - Brookings Metro

Alice M. Rivlin
Alice Rivlin
Alice M. Rivlin Former Brookings Expert

January 1, 2002

Many urban residents and city officials are worried that the combined impact of the recession and ongoing terrorist threats may have a devastating effect on the health of cities.

This paper attempts to shed light on these concerns by examining the impact of the last two recessions on large cities, by exploring recent trends that may affect the vulnerability of cities in the current recession, and by speculating on the long-term effects of terrorism on urban centers. The analysis is relatively reassuring about the short-term prospects for cities in the recession; the economic and social health of individual cities will depend on their industrial makeup and state-level spending decisions. Over the long term, the paper posits that fears of terrorism will play, at most, a small role in determining the fate of cities as employment and residential centers.