It was terrorist mastermind Osama Bin Laden’s goal to leave a wake of economic decline in the aftermath of the Sept. 11 attacks on America.
“The immediate shock led to a drop in confidence due to fear, and that lack of confidence spilled over into the market immediately,” said Olivia A. Jackson, associate professor of international studies at Florida Memorial University. “That week and the following week, everybody was panicking.”
Jackson, whose research area of concentration is terrorism and its impact on the economy, said the overall aviation industry felt an immediate decline followed by a hit to the insurance industry. While New York felt the worst of the economic plunge following 9/11, with a major dip in tourism and the displacement of more than 18,000 businesses in the immediate area, Jackson said the real estate and housing market were also automatically impacted.
According to a New York Times report a year after the attack, travel remained depressed, with fewer tourists from Asia and business travelers coming to the city.
In a study conducted by the United States Congressional Research Services it was declared that close to $50 billion in insurance losses occurred, making the event one of the largest insured incidents in history, giving rise to huge property and casualty claims, according to the report.
“The instant those attacks occurred it became cyclical throughout the economy both in the United States and on a global level,” said Jackson.
According to Bryan Roberts, Ph.D., who conducted research on the macroeconomic impact of 9/11 on the United States for the Department of Homeland Security, tourism took a dive nationwide initially, but it regained momentum as more people traveled domestically by car and in their own areas.
“By 2003, we were back to a level you might expect,” he said.
However, Roberts noted that for two years after 9/11, there was a sharp drop in the number of international visitors to the U.S., and although it did recover subsequently, it never came back to the level expected, he said.
“[The event] did lead to a permanent negative impact on the number of international travelers to the U.S.,” said Roberts.
Jackson agreed, saying while economic growth slowed following the attacks, the U.S. economy was already in a recession months prior to 9/11.
Jackson’s research, conducted in 2008, highlighted the U.S. economy’s resilience despite the catastrophic nature of 9/11.
Long-lasting impacts, however, are likely to be associated with the responses that the U.S. made to the attack, said Roberts.
“I think they would be difficult to quantify,” he said. “For example if you are willing to include Operation Iraqi Freedom as a response, that clearly had an impact in terms of military spending and some direct economic impacts.”
Jackson said the U.S. budget was impacted because of the spin-offs such as going into war.
“The U.S. started running up its debt,” she said.
According to a 2011 report by the U.S. Congressional Research Services, Congress has approved a total of $1.283 trillion for military operations, base security, reconstruction, foreign aid, embassy costs and veterans’ health care for the three operations initiated since 9/11.
In the 10th year of operations since the 9/11 attacks, as troops are withdrawn in Iraq and increased in Afghanistan, the cost of war continues to be a major issue including the total amount appropriated, the amount for each operation, average monthly spending rates, and the scope and duration of future costs, the report said.
Overall, however, New York City Comptroller William Thompson Jr. summed up the effect of the attacks in a report just a year after 9/11. He said the loss to the city, and country, was truly incalculable as an event that killed thousands, shattered the lives of hundreds of thousands more and left a scar on the landscape and in the hearts of New Yorkers and Americans alike.
Follow Steve Annear on Twitter @steveannear
