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CNN Effect The temporary shifting of consumer spending that occurs as a result of gripping news. Consumer spending tends to slow during events such as the Persian Gulf War in 1991 or the terrorist raids in 2001 as people stay home glued to their televisions. It is doubtful, however, that the CNN effect could change the overall direction of the economy. Most necessary goods will have to be purchased eventually. The only loss to the economy occurs in service-oriented venues, such as restaurants and movie theatres, which may never recover lost revenues.
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