Immediate Impact
Negative Impact
The immediate impact of September 11th was extraordinary. Al-Qaeda operatives have estimated that the attacks would cost the American economy roughly one trillion dollars. This is an estimate that is very hard to prove. Efforts have been taken to estimate the cost. You must calculate the price of rebuilding or repairing the buildings, the cost of the planes, the cost of income lost by the victims. You also must add the prices taken from the public and given to the government for protection. You must add the price of inflation of airline prices because of security. There are many different aspects that contribute to the price of September 11th. First, the World Trade Center and other adjacent buildings were insured for roughly 4 billion dollars. The Pentagon cost another billion dollars to rebuild. The four planes cost between $50 million and $100 million each.
The victims' income was lost to the economy, however it is difficult to calculate the total lost. Some lives would be worth more, if the victim had been able to continue work for a full lifetime. The rough estimate for loss of the victims is $5 billion. People who worked in the WTC did not produce goods or services for weeks because the did not have a workspace. Many of these workers were offering financial services. The estimate loss of goods and services totaled $10 billion. The total insurance price for the New York attacks tallied between $25 billion and $30 billion.
Because the economy was hit so rapidly and so extensively, the impact of 9/11 is the best example of aggregate demand shock in decades.
Industries Affected
- "One person's problem is another person's business" - Patrick Lenain, Marcos Bonturi, Vincent Koen
Airline
Because the attacks of 9/11 were done with commercial planes, there was a large impact on the Airline industry. The commercial airline industry was already facing difficulties because of the recession. The government gave the industry aid of 15 billion dollars. 5 billion dollars immediately and 10 billion dollars to be given in loans.
Even with the help of the government the airline industry was still very close to having to file Chapter 11 bankruptcy.
Insurance
The insurance industry was hit with the largest casualty/property claim ever. The cost of the claim was estimated at $40 billion.
Insurance companies, because of the terrorist attacks and threat of future attacks, are offering limited, expensive, and restricted polices regarding terrorism. The insurance industry raised questions whether the government should be responsible for some of the damages because the government is responsible for the lives and assets of the people.
Travel/Tourism
Tourism was hurt because of 9/11 mostly because of the threat of future terrorist attacks. Less people were willing to travel and the airlines flew less flights. This cycle compounded the problem at hand. New York, in particular was a very popular tourist attraction, but because of the attacks and threat of future attacks saw a dramatic drop in tourism.
Small Business
Because of the 9/11 attacks, nearly 18,000 small businesses were disrupted, moved, or destroyed. Most of the small business that were affected were close to the World Trade Center buildings. Small business suffered tremendously and the government has been criticized for some of their actions. People have criticized the government for insufficient funding, burdensome application requirements, arbitrariness, and delays.
Positive Impact
It is very difficult to look at the attacks of 9/11 and see a positive. 9/11 will always be thought of as one of the worst attacks to American citizens ever. It is possible; however, to find positive aspects in the economy because of 9/11. These are industries and actions that increased GDP.
Industries Affected
Clean Up
The destruction of the terrorist attacks had to be cleaned up. Clean up effort from the 9/11 attacks brought more money into the economy because the workers had to be payed for their work. This provided a few, but not many, jobs back to the people.
Security
The attacks of 9/11 showed the country and leaders of the country that US citizens were vulnerable to attack. This motivated industries, Congress, and the President to increase spending on security. Airlines extensively upgraded security technology. The government passed legislation to require higher standards for security. This growth funneled more government spending and investment into GDP.
