At 11 p.m., Shalom Majorcas outside his three-month-old bar, talking with members of Israel's cricket team. Cars were bumper to bumper. Pedestrians were shoulder to shoulder. The self-consciously hip restaurants and lounges of Queen Shlomzion Street, Jerusalem's trendiest, were teeming with customers.

Inside Majorcas's two-story watering hole -- a pseudo-Irish pub fronted with $10,000 worth of shatterproof glass, just in case a suicide bomber wanders by -- the tables are crammed with well-heeled Israeli, Turkish, Irish and American customers celebrating what so far has been a quiet summer.

"They can't break us," Majorcas said. Sure, it was risky opening a bar in the center of Jerusalem with the Palestinian uprising still unresolved, he said. "The amount of courage you have determines your success," and Majorcas, 24, never lost faith. Even after four years of violence in which 31 Palestinian bombings in Jerusalem killed 173 people and wounded 1,550 more, "people still went out, they still went to bars, they still went to restaurants. You can't give up."

There have been no suicide bombings in Jerusalem in more than five months, a fact everyone knows but many are reluctant to boast about, afraid of jinxing their good fortune. The sense of greater security and lower risk, combined with an economic boomlet that many say is also largely the result of fewer attacks, has sparked a rebound not just in Jerusalem, but across Israel.

Tourist arrivals were up 66 percent in the first half of 2004 compared with the same period last year. Economic growth in the first quarter of this year was 5.1 percent, the highest since the third quarter of 2000. The stock market jumped 32.4 percent over the past 12 months. And most important, the number of suicide bombings stands at eight so far this year, with 35 fatalities, compared with 23 suicide bombings with 139 fatalities last year and 42 and 228 in 2002.

Like most people here, Itzik Evron, general manager of Jerusalem's Crowne Plaza Hotel -- where tourist bed nights, a measurement of occupancy, dropped from about 77,000 in 2000 to about 25,000 last year but are poised to bounce back to about 50,000 this year -- credits the construction of a new barrier around much of Jerusalem for stopping would-be suicide bombers, combined with the Israeli government's campaign to crush Palestinian militant groups and kill their leaders.

After Israel assassinated two leaders of the Islamic Resistance Movement, or Hamas -- Sheik Ahmed Yassin and Abdel Aziz Rantisi -- this spring, "everybody said there's going to be a huge terror attack. And instead, there's silence," Evron said. Now, "you go on the street and people are feeling good. But we are afraid something's going to happen. It's too good to be true. Everybody is still waiting for the next time."

"It's still the same horrified population," said Ofer Blum, a fire-eating and juggling street performer who tantalized a crowd gathered before his outdoor stage on Ben Yahuda Street, a pedestrian mall near Queen Shlomzion Street that has been the scene of several suicide bombings.

"I drive a lot, and I try to avoid stopping near buses. Personally, I would avoid any gathering for a street performer," he said, grinning at the irony. "You need only one explosion in one major city to change the whole thing back again."

Still, like survivors cleaning up after a devastating storm, the people of Jerusalem are being swept up in a sense of revival and revitalization, and Queen Shlomzion Street is on the leading edge. Taking advantage of the improved security, business owners say that about 20 pricey bars, restaurants and lounges have opened along Queen Shlomzion and in the alleys immediately adjacent to it over the past 18 months.

"Things have changed in Jerusalem," said Maidan Alkobi, a bartender at the Sol Tapas Bar, across from Majorcas's pub. "The terror isn't keeping people at home anymore. "Two years ago, people would stay at home, afraid to come out. When they came out, there would be an attack, and they would go back home for two, three weeks. Now, it is maybe two or three days, maximum. There are fewer attacks now, for sure, but I think the people have changed, too."

"When the Palestinians began attacking restaurants and bars every day, this city became a ghost town. People were scared to go out, and so many places shut down," Hebrew University student Michal Levy, 25, said while relaxing at the Shot Bar, a pioneer on Queen Shlomzion Street when it opened more than three years ago. "Now people are going out more, and I feel this place is almost back to how it was before the intifada."

"I think young people were just sick and tired of not being themselves" and hiding out at home, said Maya Attias, a 23-year-old law student. "It's great to see Jerusalem beginning to wake up and carry on with life as normal. Things in the city were very depressing for a long time. I am now partying as hard as I can to make up for lost time."

The businesses along Queen Shlomzion are also remaining open on the Sabbath and serving non-kosher fare. Such practices have traditionally been taboo in Jerusalem, a haven for observant Jews.

"We have bombs, we have conservatives -- it's time for freedom," Majorcas said of the sea change. "Everybody is getting his corner."

But lingering in the back of everybody's mind was the same question: Can it last?

"They hope that things will be okay this time, but many times it has ended in tragedy," cautioned Yulia Golyansky, 24, a bartender at the Osho Lounge and Restaurant.

Avraham Birenbaum, head of the Jerusalem Merchants Association, said that business revenues in Jerusalem were up an average of 35 percent this year, due largely to the improved security environment. "But the security situation is very fragile. It's enough that two bombers could explode themselves and cause a lot of casualties, and it will go right back to the old way it was two years ago."

But Majorcas said he was not intimidated by the future.

"Even two years ago, I would have opened this place, even with the situation, with all the terror attacks," he said. "We have created a community here, and I have the names and phone numbers of most of my regulars, and we would have supported each other. And we will support each other if it starts again."

Special correspondents Hillary Claussen and Ian Deitch contributed to this report.

Ofer Blum, a street performer, says "one explosion" would rekindle fears of attacks among the Israeli people.Shalom Majorcas recently opened a bar in Jerusalem. "They can't break us," he said. "The amount of courage you have determines your success."