World economic effects arising from the September 11, 2001 Terrorist Attacks

It is usually claimed that the September 11, 2001 Terrorist Attack had immediate and far-ranging economic effects. The overwhelming majority of these effects, however, were not a direct result of the terrorist attacks, but a consequence of the subsequent actions of western people and their governments. This is particularly so with regard to long-term economic changes, such as the worldwide decline in the aviation industry, which still shows no sign of recovering. Nevertheless, it is convenient to discuss the effects of the attacks themselves and the effects of later actions by western economies together.

Numerous investment firms housed in the World Trade Center lost hundreds of employees, including Cantor Fitzgerald and Marsh & McLennan.

Stock exchanges all over the world plummeted; many of them--including the London Stock Exchange--were evacuated. The New York Stock exchanges remained closed until the following Monday. Gold and oil prices spiked upwards. See also Stock market downturn of 2002.

Travel and entertainment stocks fell, while communications, pharmaceutical and military/defense stocks rose. Online travel agencies particularly suffered, as they cater to leisure travel.

The Times reported on 18th September that investigations are under way into the unusually large numbers of shares in insurance companies and airlines sold off before the attack, in London, Italy, Germany, Japan, Switzerland, France and the US

U.S. gas prices briefly shot up.

ScamBusters reported that some email pleas for relief funds for victims of the attacks were simply scams to procure credit card numbers from inexperienced web users. ScamBusters offered tips to help donors ensure their contributions went to the right places.

Tourism in New York City plummeted, causing massive losses in a sector which employed 280,000 people and generated $25 billion per year. In the week following the attack, hotel occupancy falls below 40 percent, and 3000 employees are laid off. Tourism and hotel occupancy also falls drastically across the nation.

Share prices of airlines and airplane manufacturers plummeted after the attacks. Midway Airlines, already on the brink of bankruptcy, shut down operations almost immediately afterwards. Other airlines were threatened with bankruptcy. Tens of thousands of layoffs were announced in the following week.

The New York City projected budget deficit for the 2003 fiscal year which begins July 2002 ballooned from $2-$2.5 billion to approximately $4 billion, though most direct expenses related to the rescue and recovery effort are to be covered by the expected $40 billion in federal aid. However, the related drop in tourism and Lower Manhattan tax revenue is not expected to be covered.

Over the following months and years, western economies (the United States in particular) diverted massive sums away from productive activities and into activities that produce no economic return or even negative return, notably airport and aircraft security (producing long delays and depressing passenger numbers) and military action against states said to support terrorism. The total cost of the western reaction to the September 11th attacks is unknown, but clearly vastly higher than the cost of the attacks themselves.