It has been more than a decade since one of the most pivotal event in the United States and by consequence, the world history took place: the 9/11. Its after effects can be felt even now, so much so that it would not be an exaggeration to call it the key factor that has defined international relations and shaped up the economic and political structure of a number of countries, as we know today.
Frankly, when I sat down to examine the impacts of this event, mainly the economic ones, I had no clue that situations as recent as the 2008 recession have been linked to it by a whole host of economists and experts attempting to study and quantifying the overall impact of 9/11. However, what we know for certain is that it did lead to a number of wars in Afghanistan and Iraq along with the ongoing war on terrorism. It has also significantly altered America’s foreign relations with other countries, particularly Islamic, causing people to rethink about the role of religion in politics and government decisions.
The primary motive of the 9/11 attacks was to cripple the US economy to it’s very core, by carrying out attacks on the Wall Street, the Pentagon and the White House. The first two of the attacks were successfully engineered, while the third one on the White house failed. The total death toll of 2975 people surpassed that of any previous attack on US soil, causing damages of epic proportions. An overview of the immediate economic impacts of 9/11 reveal that the attacks were responsible for destroying around 400 businesses in the World Trade Centre (not to mention the lives of employees lost) and more than 1000 businesses in the vicinity, who were forced to shut shop. For the first time since the Great Depression the New York Stock Exchange closed, reopening only after four trading days. The Dow fell by 7.13% or by 617.78, the point loss being the worst one day drop of Dow ever. The 9/11 attacks also worsened the 2001 recession, that had begun in March 2001 where the economy had contracted by 1.3% in the first quarter. Just when there seemed to be signs of a recovery in the second quarter, the 9/11 attacks trampled upon all opportunities of bouncing back by contracting the economy again by 1.1%, thus extending the recession. Even after the “official” culmination of the recession in 2001, the Dow kept falling for another year, the key factors held responsible being the fall in consumer confidence and continuous threats of war. Insurance claims for various damages soared, with insurance companies facing upto $33 billion in insured losses. Fall in air travel for leisure as well as business purposes meant that the airlines incurred upto $7 billion in losses, throughout 2001. Airlines and Insurance companies were thus, particularly hard hit by the attacks.
It’s a well known fact that America didn’t take 9/11 as a passing event, rather it initiated one of the biggest government spending programs in US history- the War on Terror. It was launched under the term of President Bush with the sole intention of finding and prosecuting Osama bin Laden, the mastermind behind the 9/11 attacks. The initial cost of the war in Afghanistan was $20 billion and an additional cost of $13 billion was incurred to set up the Department of Homeland Security. However, after the deployment of troops in Iraq, America aggressively ventured into any country that it suspected to aid Al Qaeda, and the costs of war kept mounting. By the end of Bush’s term in office the costs were estimated to be $864.82 billion, which was excluding the increased spending in Defense Department and Homeland Security spending. A recent study estimates the total cost of war at $3.7 trillion, which if brought back home would mean $31,000 for every family in America. Such estimates lead people to question the very need for a war at the cost of better facilities for American citizens as well as the hundred thousands of civilian lives lost in Iraq. The $50 billion to $100 billion of economic damages due to 9/11 seem highly insignificant when compared with the trillions incurred by America for wars, all the while neglecting its own people. These questions are the reasons why the recent decisions to wind down on military spending by President Obama have been appreciated all over.
In retrospect, the financial impact of the attacks though seemingly huge, were to a large extent localized. Comprehensive studies reveal that the annual GDP loss due to the attacks was between $35 billion and $105 billion or just 0.5% and 1% of GDP.
Thus, it would not be misguiding to conclude that 9/11 failed to leave a significant blow to the US economy as they were intended to. This is because the actual results by and large have been quite contrasting.