It has seemed almost disrespectful to ask the question because the last thing people want to think about during an unspeakable tragedy is their wallet. Nevertheless, the response of the American consumer to last week's cataclysm will determine whether the world economy slips into its first synchronised recession since the 1930s.

What happened on Wall Street yesterday may ultimately have no bearing on the final verdict from the real economy. The fall on day one could be followed by a slight recovery on day two or three, as was the case in the European and Asian markets last week.

What matters more is which side of the US psyche is aroused. The world is asking Americans to do the seemingly impossible: be carefree in their financial affairs yet curb their patriotism in foreign policy. No one wants an emotional but unsuccessful retaliation that provokes even more random violence.

No amount of loyalty to the Stars and Stripes could stop the Dow Jones index recording the largest three-digit tumble in its history yesterday. However, the 648.81 points lost translated into only 7.13 per cent. Which, coincidently, is the average fall for past crises such as Pearl Harbor.

Prince Alwaleed Bin Talal, the nephew of Saudi Arabia's King Fahd, declared the US economy solid and began buying shares. "This ugly situation created low prices," he was quoted as saying. The symbolism of a Saudi prince voting with his feet to endorse the US in its hour of need is powerful. But he was wealthy enough to make the sacrifice. The question for US consumers is whether they can afford to keep spending.

The past offers a mixed but encouraging picture.

The confidence of American consumers did not suffer after the assassination of president John F. Kennedy in November 1963; or after the Iranians stormed the US embassy in Tehran in November 1979; or after the Californian earthquake in January 1994; or after the Oklahoma City bombing in April 1995. In the latter case, retail spending in Oklahoma state increased by 2.2 per cent, after subtracting inflation, during the course of that year.

Each of those episodes was viewed as a turning point, when the US lost a little bit more of its innocence. Even so, the grieving did not stop the wheels of capitalism from turning.

Unfortunately, the precedent closer to the anguish of last week is the Iraqi invasion of Kuwait in August 1990. The US was teetering on the edge of recession, as it is now. Consumer confidence crashed in four of the next five months. It recovered only after the US won the Gulf War in record time in January-February 1991. The war that George W. Bush talks about will not have a clearly defined goal.

The Gulf War was credited as the final nail that drove the US into recession in 1991. American consumers stayed at home, thus exporting their pessimism by damaging tourism markets such as Australia's, which relies on the typical American traveller to take two internal flights once they get here.

One of the Howard Government's chief economic advisers confided: "It's hard to see how this shock could be possibly expansionary for the US economy itself, it can only be contractionary." He also conceded that Australia has tended to follow the US into recession.

That may be a trivial issue given the loss of life in the US. One of the many questions in the end of the world as we know it is: will a recession really matter?

Obviously, those who lose their jobs won't be happy. But people may have to get used to the idea that the international economy won't be the vibrant place it was in the '90s.

The cost of air travel will become prohibitive for many who took it for granted in recent years. The grounding of Ansett at home may be an early warning of what life beyond the attacks will be like – the price of a ticket doubled and the number of seats available halved overnight.

The West was already facing the prospect of slower economic growth than its citizens had been accustomed to. The ageing of populations in the US, Europe and Australia means there will be fewer people entering the labour market – and thus fewer new consumers with incomes to spend – compared with the previous decade.