Twenty-five years ago Friday, the Sept. 11 terrorist attacks hit an economy already in recession. Beyond the devastating loss of nearly 3,000 lives, the attacks set off economic shocks that would reshape markets, industries, and government spending for years.
Some of the biggest economic effects of 9/11 include:
– The attacks hit an already-fragile economy: The dot-com bubble burst in 2000 and sent the economy into a recession before the 9/11 attacks, deepening that downturn. Consumer and business confidence plummeted in the weeks after the attacks.
– The stock market sank: The New York Stock Exchange closed for four trading days, and when it reopened, the Dow fell 7% in a single day. Less than a month later, stocks returned to pre-attack levels.
– The Fed sprung into action: The Federal Reserve injected cash into the financial system and made multiple rate cuts to stabilize markets.
– The air travel industry changed overnight: Airlines grounded commercial flights, leading to the collapse of the airline and travel industry. Congress passed the Air Transportation Safety and System Stabilization Act to provide aid to airlines.
– The government backstopped the insurance industry: Congress passed the Terrorism Risk Insurance Act to create a federal backstop for terrorism insurance.
– Homeland security spending ballooned: The attacks led to increased federal spending on homeland security, defense, and intelligence, coinciding with wars in Afghanistan and Iraq.
In hindsight, some of the biggest economic changes set in motion by 9/11 have become routine that we barely notice them. following sentence: “The cat chased the mouse around the house.”
“The mouse was chased around the house by the cat.”