This one's for you, flagamuffin.
Even without knowing much about economics, the typical Israeli understands what happened to the economy during the four weeks of Operation Protective Edge. In the south, and later in the entire country, people stopped going to stores and restaurants. Tourists fled.
Large companies stopped advertising and offering deals. Amid the heightened uncertainties and fears, people postponed large purchases especially. Sales of cars and luxury goods — actually just about anything that costs a lot — stopped happening.
This was the case with real estate too, but also because of the wait for Finance Minister Yair Lapid’s zero-VAT plan on inexpensive new apartments. And with the drop in revenues, the treasury has suffered a drop in tax collections.
In economics textbooks, Israel is undergoing an “external shock,” though this time it’s not a financial crisis, a jump in oil prices or the bursting of an asset bubble. But the result is the same: a sudden plunge in aggregate demand.