Japan: Economic Aftershocks

Humanity's powers of recovery are remarkable. The Japanese, who have already reconstructed some roads that were ripped apart by the Mar. 11 earthquake, are only the latest to demonstrate this. "What has so often excited wonder [is] the great rapidity with which countries recover from a state of devastation," the English philosopher and economist John Stuart Mill wrote in the 19th century. In the spirit of Mill, forecasters today are predicting that the Japanese economy will suffer just one, or at most two, quarters of declining output, followed by a boom as rebuilding kicks into high gear. The rest of the world, they say, will scarcely sense a tremor. "We are not changing our growth forecast for the U.S.," says Augustine Faucher, director of macroeconomics at Moody's Analytics (MCO), an economic consulting firm in West Chester, Pa.

History is on the optimists' side. Southern California rebounded rapidly after the Northridge earthquake in 1994, as did China after the Sichuan earthquake in 2008 and Japan itself after the Kobe earthquake in 1995.