Ten Years Later: The September 11 Attacks
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Economic Impact of September 11

The financial impact of September 11, 2001, was devastating to New York City and to the commercial airline industry. It was this economic damage as much as the physical damage that had appealed to Osama bin Laden. He wanted to attack the United States at its source of strength and cause it economic distress. Bin Laden was partially successful, as property losses, particularly in New York City, were high. Southern Manhattan was the center of the New York City government and international finance, and both were paralyzed. Office buildings were empty, and the subways stopped running. The tens of thousands of people who lived below Canal Street were prevented from going there. All schools and bridges were closed. But where the economic impact was greatest and most long lasting was with the airline industry.

It took the American airline industry nearly five years to recover from September 11. Both American and United airlines lost two aircraft to the hijackers, but insurance covered most of those losses. What hurt the airlines was the loss of customers, many of whom were afraid to fly. Airports had been shut down around the country. Even 10 days after September 11 the New York City airports were running 80 percent of their flights but with only 35 percent of passenger seats filled. Lost revenue from the three New York Airports was around $250 million a day.

Compounding the problem was the rocketing cost of oil and the higher aviation premiums from insurers. In the period from September 11, 2001, to September 2004, the airline industry lost $23 billion. In October 2001 airline passenger traffic dropped 23.2 percent in comparison to October 2000. An infusion of $1.5 million of federal aid helped the airline industry, but a series of bankruptcies occurred in the next few years. Only gradually have the airlines begun to creep back to financial health.

New York City had a massive loss of jobs and buildings. Job loss has been estimated at 143,000 a month, with lost wages of $2.8 billion. Nearly 70 percent of the jobs lost and 86 percent of the wages lost were to persons with well-paying positions in finance, insurance, and banking. Building loss has been assessed at $34 billion, with only about half of the building loss insured at value. It has been estimated that the city lost $60 billion in revenue, with $82 million coming from lost parking ticket revenue alone.

The shortest-lasting economic impact was on the stock market. On September 11, 2001, the hijacked aircraft crashed into the World Trade Center complex before the opening of the stock market. Damage to communications, evacuation orders, and rescue efforts led to the closing of the market for the next four days. When the stock market reopened on Monday, September 17, there was an immediate sell-off.

On September 10, the Standard & Poor's 500 Index had closed at 1,092.54, and when trading closed on September 17 the index was at 891.10. By September 24, however, the stock market was climbing again. On October 11, the index closed at 1,097.43.

The American economy rebounded from the September 11 attacks within months. One reason that these attacks did not have a more lasting impact was that they were concentrated by geography and industry. Whereas New York City, and to a lesser extent Washington, D.C., suffered economic dislocation from unemployment and property damage, the rest of the country was left relatively untouched.

Stephen E. Atkins


Further Reading
Griffiths, Katherine. "US Airline Industry in Tailspin to Disaster." Independent [London], September 10, 2004, 46; Kawar, Mark. "9/11 Shock Didn't Bring Bears to Stock Market." Omaha World Herald, September 17, 2002, 1D; Polgreen, Lydia. "Study Confirms 9/11 Impact on New York City Economy." New York Times, June 30, 2004, B6; Zuckerman, Sam. "9/11 Before & After: It's the Rebound, Stupid." San Francisto Chronicle, December 30, 2001, D7.
 

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