Terrorism has many effects on one country. The U.S., as well as its economy, is not an exception. This paper will present a discussion on the specific impacts of the September 11, 2001 terrorist attack on the American economy. This paper will also provide an analysis of the preventive measures made by the American government even prior to the attacks, its immediate corrective actions done shortly after 9/11, and the government’s long-term activities that will ensure the preparedness of the nation in the event another terrorist attack is made against this country. This paper will also include a presentation of the argument on the alleged involvement of the government or the conspiracy theories of the attack.
The Effects of Terrorism on U.S. Economy
and Debate on the Government’s Alleged Involvement
The tragic effects of the September 11, 2001 terrorist attacks have signaled an alarm not only on the United States but on worldwide security as well. Consequently, the terrorist attacks have caused the world to ask this question: if one of the most powerful and rich countries in the world has fallen victim to terrorist attacks, how can the smaller and more vulnerable nations prevent such a tragedy to occur? While it may be difficult to have an objective discussion about the horrors of the 9/11 primarily because of the destruction of a significant number of human lives, there is an essential need to discuss its other implications such as how the attack affected the American economy. The senseless death of many people and loss of considerable amount of property just form part of the totality of the situation. Thus, it is helpful to come up with the measurable impacts of the 9/11 event on the economy of the nation. This is because an effort to explore and eventually present a clear discussion of the other effects of such terrifying human act, such as its economic implications, will ultimately results in a better analysis of the actions taken by the concerned responding sectors.
Beyond the safety concern brought about by the tragedy, it is worthwhile to undertake a review of such historical event on its other equally important facets. A moderate assessment on the economic effects of the terrorist attack in order not to disturb the sensitivity of the issue with regard to the loss of lives should be conducted. However, the approach should be comprehensive to be able to have a clear understanding of the tragedy’s aftermath. In this way, not only the American people but everyone in the world will have the opportunity to grasp the lessons of the economic effects of terrorism. In addition to this, it is highly important to examine whether the preventive measures done prior to the 9/11 event and the actions made in response to the impacts of the tragedy to the American trade and industry were effective. In doing so, every citizen would be able to make preparations for responding accordingly in the event of future misfortune.
9/11 Terrorist Attacks
Around 19 devoted fanatics, with reported connection with the Osama bin Laded-led Al-Qaeda, hijacked the American Airlines Flights 11 and 77 as well as United Airlines Flights 175 and 93 in the morning of September 11, 2001. From their respective departure areas, United Airlines Flight 175 and American Airlines Flight 11 intentionally crashed into the World Trade Center’s twin (North and South) towers, killing instantly the passengers and hijackers on board. Thereafter, the Pentagon was hit by the third hijacked plane, the American Airlines Flight 77 while the United Airlines Flight 93 crashed close to Shanksville, Pennsylvania, missing its primary target which is the White House or the U.S. Capitol Building. The suicide attacks resulted in more than 6,000 human lives lost as well as a significant damage to a number of industries and financial establishments (“The 9/11 Commission Report,” 2004). The terrorist attacks made on the above locations which signify the power and wealth of the United States have totally changed the track of American history. This is because beyond the sudden impacts of the 9/11 terrorist attacks are long-term implications particularly with regard to the economy of the United States.
Effects of 9/11 to American Economy, A Retrospective Assessment
According to an explanatory analysis by the Congressional Research Service and The Library of Congress, the terrorist attacks toward the United States led to a considerable impact on the productive ability of the country, despite the fact that locally, it had a very notable implication on New York and to a lesser level, on the whole area of Washington, DC. Hence, it can be said that for the September 11 terrorist attacks to significantly impact the American economy, experts stated that such kind of tragic event needs to have affected the financial value of a significant input in the economy, such as the price of energy. Moreover, to claim that 9/11 has badly impacted the totality of demand through a mechanism such as the relationship between the end user and certainty of industry, there could have been a fiscal panic or liquidity emergency or a run on the dollar currency worldwide (“The Economic Effects of 9/11,” 2005).
The said assessment also stated that it was initially perceived that the totality of the demand was jeopardized. This is because there was a point that the current data manifested that the growth of gross domestic product or GDP was at a low level during the first quarter of 2001. In addition, a published data in October report that the GDP was under stress, particularly on the third part of the same year. These factors resulted in a statement that the horror of 9/11 pushed an apparently weak American economy over its limit and eventually into its complete collapse. However, an analysis of amended data showed otherwise. In fact, during the terrorist attacks, the American economy was already on its third successive part of retrenchment and that the economy gained its growth during the last quarter. Hence, this assessment manifested that the inflicted implications of such terrorism on the American economy, particularly on the aggregate demand, was perceived to be only short-lived. Prior to and immediately after the terrorist attacks, several events were already in place. These situations enabled the economy to immediately recover from the tragedy, contrary to what is expected or in the event that the United States is unable to prepare for such eventuality (“The Economic Effects of 9/11,” 2005).
It was explained further by the report made by the Congressional Research Service and The Library of Congress that the rapid economic recovery became possible because the Federal Reserve lessened credit even during the initial quarter of 2001 which resulted in an increased or energized totality demand. This has also allowed the economy to advantageously delay its response when national policies were changed. In effect, the reaction of the economy and the public in general were only showed during the last quarter of 2001. This made it appear that the terrorist attacks give rise to a limited implication. Most importantly, the Federal Reserve, during and right after the tragedy, undertook an appropriate corrective measure that prevented a financial crisis and shortage in liquidity. The move was supported by assistance from international central banks that sustain the American currency in world markets. At the same time, the action contained the infectious effect of the terrorists’ attacks from scattering to the economies of other countries (“The Economic Effects of 9/11,” 2005).
Although the American trading system with some nations was inevitably affected, analysts said that it was tolerable. Also, even if escalated oil prices affected the economy for a while, the value would immediately go back to its existing price level when the tragedy has not occurred yet. The said report stated, on the other hand, that the country could not prevent the long-run impacts of 9/11 in terms of productivity growth. This is because resources can definitely be used, currently and in the future, to guarantee the protection of manufacturing, supply, funding, and communication. However, it is worthwhile to note that the U.S. economy prided itself that it has battled its way and survived the expected serious effects of the tragedy. Ultimately, the same assessment disputed that the timely preventive measure and immediate reaction restricted the short-lived implications of the terrorism on the American economy in general (“The Economic Effects of 9/11,” 2005).
Economic Cost of 9/11
Looney (2002) corroborated the above claim by the Congressional Research Service and The Library of Congress that the September 11 terrorist attacks had short-term effects on the U.S. economy. He said that, similar to major man-made tragedies, the 9/11 attacks have limitedly disturbed the American economic activity. Looney (2002) likewise stated that the extent and deliberate aspect of the terror event tends to have more permanent implications in several industries and sectors of the American economy. Looney (2002) then discussed some conceptual categories to present the economic costs of such disaster. He said that the economic effects are measured according to their features if they are indirect or direct in nature as well as whether the implications are instant, on a limited period, medium-term, or permanent. It is notable that direct and limited economic impacts are immediately recognized and quantified. On the other hand, long-term approximates with indirect costs needs many presumptions in terms of counterfactuals which are less solid (Looney, 2002).
According to Looney (2002), the instant economic effects of 9/11 were felt in lower Manhattan where around 30 percent of workplaces and several industries closed down. In effect, an estimated 200,000 kinds of employments have temporarily disappeared or transferred outside New York City or far from the surrounding areas of the impact zero. The physical assets that were damaged were placed at around the financial value of $14 billion for private industries, approximately $1.5 billion for enterprises under local government, and state controls and some $0.7 billion for businesses operated by the federal government. On the other hand, the amount allotted for the salvaging, cleanup and related activities was placed at around $11 billion, representing for an entire straight cost of $27.2 billion (Looney, 2002).
One of the most notable instant and temporary indirect implications of 9/11 was that major forecast services have harshly changed downward their respective estimates with regard to the economic movement shortly after the tragedy. A compromised projection for actual GDP growth was immediately lowered by 0.5 percent and 1.2 percent points for 2001 and 2002, respectively. In addition, the indirect forecasted increasing deficit on the income of the nation until the end of 2003 arrived at 5 percent points of the yearly GDP or with an approximate amount of one half trillion. During the third part of 2001, the destruction of the airline industry and the fact that a significant number of consumers became obviously careful resulted in the shrinking of the real GDP. Thereafter, the aggregated demand surprisingly picked up, consequently escalating the GDP level (Looney, 2002).
While the fixed investment of the private sector made a record because of a sharp plunge and many accounts were cut, these were compensated by an increased consumption of household materials, as well as the lowered energy prices and expenditures by the government. The demand for information technology and security industries also increased. However, although the totality of demand has proven to be fairly flexible, it could not be denied that several businesses suffered more as manifested by falling company incomes and decreasing final products (Looney, 2002)
Generally, Looney reported that the temporary serious effect of 9/11 to American economy was really far less than what is initially perceived and feared. Just like what the earlier retrospective assessment has claimed, the immediate recovery of the economy and its tolerable impacts are primarily attributed to the actions taken by the U.S. Congress, the Bush Administration, and the Federal Reserve. The notably good economic crisis management used by the three sectors brought back the confidence of the economy, inflicted liquidity, and gave resources that appropriately addressed the outcomes of the tragedy. In addition, the responses made immediately by the Federal Reserves after the attacks such as the lowering of the credit value and the temporary provision of large liquidity amounts assisted in securing the honor of the economic system and prevented the collapse of many industries (Looney, 2002).
Due to the fact that the tragedy was planned and hence can possibly happen again, it made an equally notable medium-term economic effect. This is manifested in the industries of airlines, insurance, shipping, tourism, as well as related travel businesses and with escalated expenses by the defense department. In other words, the developments showed by these sectors were primarily attributed to the wider economic implication of 9/11 (Looney, 2002). Lastly, the lasting impacts of the terrorist attacks include the increasing transaction monetary values such as operating costs, inventories, risk premium, transfer of resources from the civilian body to military level, and an altered nature of globalization wherein the tragic event could have shifted away one’s preference of local or international investment. With the said report, Looney (2002) affirmed that although the immediate and temporary effects of 9/11 appeared to be manageable, its medium to lasting economic implications are definitely more challenging or difficult to handle (Looney, 2002).
Government’s Alleged Involvement
Notwithstanding the resilient short-term economic effects of the terrorist attacks which are significantly more uplifting than its lasting implications, experts have made a further analysis of the situation, leaving behind the economic aspect of 9/11. This has led to a presentation of debate on the reported conspiracy theories surrounding the real factors that caused the tragedy. These reported presumptions, in turn, which link the Bush administration to the alleged several schemes or plots that were supposedly the real causes behind the terrorist attacks. The 9/11 Truth Movement, which spearheaded these conspiracy theories, has challenged the mainstream account that was contained in the 9/11 Commission Report and primarily made by The National Commission on Terrorist Attacks Upon the United States (Hayes, 2006).
Citing a survey made by the Scripps News Service, Hayes (2006) wrote that around one-third of American people perceived that the government is the brain behind the terrorist attacks or it deliberately paved the way for the tragedy to occur for the purpose of justifying or as a prelude of declaring war in the Middle East. Hayes (2006) noted that this allegation is both disturbing and expected. It is alarming because of the fact that members of the 9/11 Truth Movement are apparently positive with the information that the American government has a hand or complicit in what has appeared to be mass killing of thousands of American people and a significant number of foreigners. However, what is more disturbing is the idea that years after the tragedy, the lives of the majority of Americans have continued despite the argument presented by many critics who still believe that their nation is being ran by alleged mass murderers. It is further debated that it is unsurprising because the administration, which these critics have suspected of having masterminded the terrorists attacks, they gained a warranted reputation for dishonesty. The 9/11 Truth Movement claimed that the reported manifestation of the government’s deception includes it having a machinery of mass destruction, conceal jail facilities and illegal wiretapping (Hayes, 2006).
As stated members of the 9/11 Truth Movement have questioned the mainstream report that accounted the circumstances prior to the tragedy, the causes that led to the event, what really happened during 9/11, and its aftermath. The group has argued that the account or the Commission report is inaccurate. The group has also suggested a thorough and additional investigation. In debating the issue, the 9/11 Truth Movement stated that the twin towers of the World Trade Center collapsed primarily because it was an outcome of a forced building destruction. This theory further argues that the United Airlines Flight 93, which is one of the airlines that targeted the White House or the U.S. Capitol Building, was really hit in mid air and just crashed in Pennsylvania. These and the other issues presented by the Architects and Engineers for 9/11 Truth, an affiliated association by the 9/11 Truth Movement, contradicted what really transpired with the hijacked airlines or what really caused their crashing to the twin towers, the Pentagon, and in Pennsylvania (Gage, 2008).
In a recent paper posted at the association’s cite, Gage (2008) explained that it is likely that the structure of the World Trade Center’s twin towers after the terrorist attack made it appear that it is characterized with explosive or showed it has features of explosive materials. Furthermore, the aftermath of the structure is indeed associated with their theory of a controlled or restrained demolition (Gage, 2008).
Dangers of Contradicting Theories
While it is a healthy discussion that a mainstream report is subjected to a critical analysis, the intention to contradict such accepted account jeopardizes the ultimate goal of presenting to the people a comprehensive and objective report. The 9/11 Commission Report made by the National Commission on Terrorist Attacks Upon the United States was primarily aimed at providing the American people comprehensive and almost close to reality reporting of the events that took place during that day. Although Hayes (2006) stated the claims of the 9/11 Truth Movement on the first part of his report, he later hinted that such contradiction and the conspiracy theories provided by the Movement have only ignited a certain level of paranoia. Aside from this, the real danger of conspiracy theories claimed by the Movement and its affiliated groups is that it “discredit[s] and deform[s] the salutary skepticism Americans increasingly shot toward their leaders” (Hayes, 2006, n.p.).
Hayes (2006) further stressed that the critics of the 9/11 Commission Report usually claim that they are just presenting questions. However, in so doing, they are inclined to center with determined resolution on the physical circumstances surrounding the tragedy. These include the lampposts that are near the crash site in Pentagon which they claimed must have also been crashed by American Airlines Flight 77; the Pennsylvania altitude which should have been disrupted by the mobile phones used by passengers of United Airlines Flight 93; and lastly, the temperature from which the burning of jet fuels and melting of steel could have been made possible. Hayes (2006) said that these contradictions are inappropriate because the presumed inconsistencies disputed by the Movement and other critics of the mainstream report are unable to present an otherwise more acceptable and logical detail of the terrorist attacks (Hayes, 2006).
Hayes (2006) then concluded that the American people and the public in general were provided with two perspectives of 9/11—a view that is gullible while the other is suspicious and vice versa. However, both are equally unsatisfactory. According to Hayes (2006), the more the people are drawn to the conspiracy theories, the higher the risk of presenting an incorrect perspective that American people allow themselves to be deceived by the government. This is because the truth is that the public has the ability to grasp what it is factual from mere theories. Still, Hayes (2006) emphasized that this is where the role of the media sets in as a neutral body that will objectively provide the real and proven details of the tragic event that befell the nation seven years ago (Hayes, 2006).
Terrorism is a hard situation to predict, particularly in a nation as powerful and rich as the United States. The 9/11 terrorist attacks gave rise to many implications. Nevertheless, beyond the significant loss of lives and destruction of properties, the 9/11 tragedy’s economic effects determine how the country has prepared, reacted, and survived the man-made tragedy. The above presentation of the specific implications of 9/11 to the American economy is enough proof of the overwhelming yet controllable or manageable implications of terrorism on the economy of the United States.
While the official 9/11 report was subjected to debate and was hurled with alleged conspiracy theories, the fact that the government remained firm on its position has allowed for the country to undertake concrete steps in appropriately addressing the consequences of the terrorist attacks. It is worthy to note that financial analysts and economic experts were not amiss with what they need that enabled them to address the situation and come up with corrective measures which they have already laid down even prior to the September 11 attacks.
Although discussing the 9/11 event through another perspective is important, focusing on its economic effects is equally essential. This is because, in so doing, not only the public were appraised of the significant impacts of the tragedy but also the leaders of the country who are the ones who advantageously acted on the situation. Ultimately, the short-lived economic effects of 9/11, which were made possible due to the in-place measures prior to the event and the correct response immediately after the tragedy, have made the country even more stable and prepared for similar eventuality in the future.
Congressional Research Service & The Library of Congress. (2005). The Economic Effects of 9/11: A Retrospective Assessment. Honolulu, Hawaii: University Press of the Pacific.
Gage, R. (2008). Undisputed facts point to the controlled demolition of WTC 7. Architects & Engineers for 9/11 TRUTH. Retrieved August 12, 2008 from ae911truth database.
Hayes, C. (2006, December 10). The 9/11 Truth Movement’s Dangers. CBC News. Retrieved from http://www.cbsnews.com/stories/2006/12/08/opinion/main2242387.shtml
Looney, R. (2002). Economic costs to the United States stemming from the 9/11 Attacks. Strategic Insights, 1(6), 1-4. Retrieved August 12, 2008 from Center for Contemporary Conflict database.
The National Commission on Terrorist Attacks Upon the United States. (2004). The 9/11 Commission Report. New York: W.W. Norton & Company.