Much of the Boston area has been shut down to facilitate the manhunt for Dzhokhar Tsarnaev. (Although Dunkin’ Donuts, a Boston institution, has remained open at police request to serve emergency response personnel.) While that may be necessary as a security precaution, it carries an economic cost. A pretty steep one, according to Jim Diffley, a vice president and chief economist at IHS Global Insight. The Boston metro area is the country’s ninth-largest (PDF) and has an economy bigger than that of Greece, Singapore, Portugal, or Ireland, according to the Fiscal Times.
“Boston is a $1 billion-a-day metropolitan area,” Diffley says. “But all that economic activity doesn’t all go away due to the shutdown—because of telecommuting, because of information technology, a lot more of it can go on than used to be the case. Some of that activity is simply deferred until tomorrow or next week or whenever the guy is caught. Think of things like groceries and cars. You can purchase those later. So a lot of that activity is simply shifted in time.”
But some of the economic activity can’t be deferred and is lost. Diffley estimates it would be between $250 million and $333 million a day. “A billion [dollars] is just where you start from. Take off a quarter to a third at most for a shutdown, would be a very rough guess.”
If the shutdown continues, he adds, “those costs would be harder to recover.” The economic toll to the regional economy would grow.
But it isn’t likely to have a lasting effect on Boston’s economy. “Look back at New York City and Washington, D.C., after 9/11,” Diffley points out. “Both were very fast-growing areas that quickly overcame [the attacks].” Boston, he predicts, will too.