The US economy is still feeling the fiscal impact of September 11 as New York readies itself for the ten-year anniversary of the attacks that claimed almost 3,000 lives.
A report compiled by New York comptroller William C. Thompson estimates the cost of the attacks, combining immediate and continuing loss, to be in the region of $83 billion to $95 billion. The immediate loss of wealth to New York City was thought to account for more than $30 billion, including the repair and reconstruction of New York’s buildings and infrastructure.
Loss in terms of Gross City Product (GCP), including job losses, was calculated at over $11 billion in the year of the attacks, and almost $16 billion the following year. These figures combined, with between $25 billion and $37 billion worth of losses from 2003 to the following year, brought GCP losses to between $52 billion and $65 billion.
Rebuilding The City
The attacks resulted in behemoth damage to the city’s office properties: According to Federal Reserve economists, over 30 million square feet of corporate property was ruined or damaged necessitating extensive reconstruction. Government-financed construction on ground zero’s 16 acres has run up a bill in the region of $11 billion. The train station that the site is to incorporate has exceeded its budget by $1 billion.
The construction of 1 World Trade Center, to be finished in 2013, will house over 2.5 million square feet of office space at a cost of over $3 billion. The 9/11 memorial, “Reflecting Absence,” will be officially dedicated on the ten-year anniversary and open to visitors starting September 12, 2011, which is two years later than scheduled. Construction of the memorial began in 2006 and cost close to $1 billion according to reports.
Job and Earning Losses
Apart from rebuilding the capital’s destroyed buildings and infrastructure, the fiscal impact of 9/11 has equally been felt in terms of job losses. Between December 2000 and March 2002, private-sector employment dropped more than 4.5%. Although an economic downturn had already set in prior to 9/11, Federal Reserve economists estimated that private sector jobs in October 2001 were between 38,000 and 46,000 lower than they would have been in the absence of the attack.
Weekly unemployment insurance claims before the attack averaged at around 8,000, but hit higher than twice this figure later in September 2001.
Air transport, financial services, hotels and restaurants bore the brunt of the fallout from 9/11. The financial industry was hit hard, with 7% job loss, or 12,000 jobs, in October 2001 and a further 6,000 in the eight following months. Similarly, banking industry jobs fell 8% in October 2001. Restaurant and hotel industries also suffered, falling 6% in October 2001 and 15% from September 2001 to March 2002 respectively. The air transportation industry saw employment plummet 20% in the months following the attack. Between job cuts and decreased salaries, the estimated losses fall in the region of $3.5 billion to almost $6.5 billion.
Pay Out Compensation
Government estimates made in the wake of the attacks were set at $20 billion to repair damages, and turned out to be quite accurate. Apart from this sum, the US government also paid out $7 billion to survivors, their relatives and businesses that suffered losses related to the attack under the Victim Compensation Fund, adding almost $3 billion more after 2003.
The insurance industry was hit hard after the attacks, with insurers paying out over $32 billion, or close to $40 billion by 2010, to cover claims related to property and casualty.
As the US seeks to slash its budget to tackle its deficit and ward off another recession, sectors forced to pare back include environmental protection, healthcare and education.
Though rebuilding after the attacks was costly enough, government spending on defense since 9/11 has equally had an impact on the US economy. The war in Iraq set the country back as much as $1 trillion. Reinforcing homeland defense and a decade of fighting in Afghanistan has also proved costly, with US military spending reaching in excess of $660 billion in 2009, over twice what it was a decade earlier.
The US economy is still feeling the impact of the attacks as industries and taxpayers alike continue to face unemployment and profit losses, and the government grapples with an increasing deficit. The overall price to be paid by taxpayers as a result of the attacks is estimated to fall between $4 trillion and $6 trillion.
Though the economy was weakened before the attacks and the financial crisis would occur regardless, the US economy would no doubt be in a far stronger position to deal with such fiscal vagaries, such as Hurricanes Katrina and Irene, had the attacks not taken place.
Upcoming Memorial Events - 9/11
- September 10: Community Board 1 will host Hands Across Lower Manhattan on the West Side Waterfront.
- September 11: A ceremony to officially unveil the 9/11 Reflecting Absence Memorial will be held at Ground Zero, with families of the victims invited; Performances of Karl Jenkins "The Armed Man" and Rene Clausen’s "Memorial" will be held at the Lincoln Center to mark the tenth anniversary; a ceremony will also be held for the victims who died in the Pentagon attack at the Pentagon Memorial in Washington, D.C.
- September 12: 9/11 Reflecting Absence Memorial opens to the public, accessible for those who have booked ahead.
Key Statistics – Economic Impact of 9/11 (source: The New Yorker)
- More than 146,000 New York jobs were lost as a result of the 9/11 attacks.
- Air transportation suffered losses as almost 1.5 million holidaymakers opted to drive or take the train instead of flying to their destinations in 2001.
- New York suffered an economic loss of $105 billion in the month directly after the attacks.
- The cost of the 9/11 cleanup is estimated at $600 million.
- The Federal Emergency Management Agency shelled out $970 million following 9/11.
- Charity donations to the 9/11 cause reached almost $1.5 billion.
- The New York Stock Exchange remained closed for six days following the attacks.
- The Dow Jones Industrial Average dropped almost 685 points when the stock exchange reopened.
- Damage to lower-Manhattan subways cost an estimated $7.5 billion to repair.
- The US government recently granted more than $4.5 billion to overhaul lower-Manhattan subways.
- Insurance payments as a result of the attacks were in excess of $40 billion.