June 11,2008: Israel's war with the Palestinians has cost it nearly $10 billion in additional defense costs. The conflict (the "Second Intifada") began in 2000, and has hurt economic growth as well. While Israel's economy has continued to grow, it has done so at about two-thirds the rate of North American and European countries.

The Palestinians have fared far worse, with their economy collapsing, and most of the population being reduced to poverty. While one in five Israelis is considered poor, more than two-thirds of Palestinians are. While high tech sectors of the Israeli economy have done very well, poverty has also increased. A decade ago, only about ten percent of the population was poor. Thus despite the continued growth of the Israeli economy, most Israelis are aware that they are losing momentum.