01.  September 11, 2001 & The Economic Impact of the Attacks
02.  Government's Financial Actions to the Attacks
03.  The Aftermath

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Our world lost so much that fateful day. We lost loved ones, and the symbol of our financial world, the World Trade Center. Aside from not knowing what the future will hold, our economy changed dramatically. It has been 6 years this month. In this newsletter we will discuss how our economy changed after the attacks. We will also look at our financial world prior to that horrible day.

In order to figure out the impact that 9/11 had on our world we must look at the economy prior to that day. The National Bureau for Economic Research announced that as of March 2001 our country has been recovering from a recession. The economy was not doing too well, however it was showing signs of improvement and the outlook on the future was good.

The were many reasons that our economy was suffering through a recession. First thing was business. There was a decline in investments. Another factor was the presidential election. If you recall in the 2000 election the US had no idea who their new leader would be for quite some time. To sum it up there were counting and voting errors in Florida. It was flashed on the news all day long. This made people very uneasy which in turn caused many people to stop investing and spending money. To alleviate the uneasiness the Federal Reserve cut the interest rates 7 times in 2001, which lead more people to refinance, buy property and automobiles.

September 11, 2001 & The Economic Impact of the Attacks

Osama Bin Laden hoped that the attacks would cost us 100 trillion dollars. It would be impossible to get an exact figure, yet we can get estimates. To begin you need to get the costs associated with the clean up and demolition of the WTC and Pentagon debris. Then come the calculations of all the costs of repairing the Pentagon and WTC memorial. Some companies in the World Trade Center did not have backup operations and lost everything. This attack cost those businesses unimaginable losses. On top of that is the $100 billion that was added to the annual federal budget for the War on Terror.

Next you must also include all other costs that are hard to get exact figures on. These costs include, but are not limited to security, travel, and lost income.

Security. We will all demand better and more security now than in the past especially at airports, sporting events and other soft targets. Some areas are very hard to protect. Regardless of the security measures tunnels and subways have proved to be target areas. If you recall in March 2004 Madrid had train bombings. Then again in July 2005 London had many bombings in the transport system. There is tighter security, but it is impossible to have every target area secured at all times.

Military. Our armed forces budget has increased dramatically since September 11. In order to successfully accomplish this we needed more armed forces stationed all over the world.

Travel. Prior to September 11, 2001 many of us never thought about our plane getting hijacked or a bus blowing up. Now some may not take trips due to these thoughts.

Lost income. Many people were greatly affected by these horrific events that took place and need counseling and are not able to work. Many rescue workers that aided in the World Trade Center have lung cancer and other life threatening illness therefore they are unable to continue working.

The numbers that we do have are broken down here.

The World Trade Centers were insured for 4 billion.

The Pentagon cost 1 billion to repair.

The planes that crashed were estimated between 50 and 100 million each.

It is estimated that the businesses in and around the World Trade Center who were out of business for a couple weeks while trying to find a makeshift office and goods lost 10 billion.

Insurance estimates the attacks on New York alone totaled 30 billion.

Another loss that must be looked at is all the people that we lost. We can never put a value on a human life. Children lost parents that day, husbands lost wives, and mothers lost sons. That loss is by far the greatest and cannot even compare to financial losses. We lost over 3,000 people that day. Economically we must realize the financial impact of losing all of those people. Some financial experts have estimated that loss at 8.7 billion.

You must also consider the impact it had outside of Washington and New York. Airlines paid a hefty price. People were a lot more cautious about flying therefore the airlines could not afford to keep a large staff and lay off more than 100,000 employees. Nationwide from mid September until the end of the year the filing of unemployment sky rocketed. It went from 300,000 per week to almost 700,000 per week. Businesses all over the United States suffered for a long time. People were a lot more cautious in everything they did including spending money. On September 4,2002 there was a press release from William C. Thompson who estimated the economic costs from the attacks is around 95 billion.

Government's Financial Actions to the Attacks

Immediately after the attacks that morning the President closed all airports and suspended all air travel. For the first time in history he ordered fighter jets to fly over major cities and shoot down any aircraft that was not authorized. He also closed the stock markets. The stock market has not been closed many times in history. Obviously we all expected air travel to be suspended due to the attacks but not many of us predicted the stock markets to be closed. As years pass we start to understand the reasoning why the markets were closed that day and actually the closure continued until the following Monday.

Stock markets have a lot to do with confidence. People invest when they feel confident that they will get their money plus a return on the money invested. When a catastrophic event occurs like September 11 no one is very confident in anything. When confidence diminishes stockholders generally cash out to keep their assets. If the markets remained open while our world was under attack the vast majority of people would have cashed out and then the stock market would have crashed. It is believed the thinking was to close the market and deal with this tragedy and give people a little more confidence prior to opening the market back up.

The FEDS made a very smart move at the time by cutting interest rates to there lowest in the past 40 years. There was enough chaos going on in the world they wanted to assure customers that they were financially stable. They were trying to avoid a scene like that in the 1920's when the stock market crashed. On October 28, 1924 the stock market became over inflated and crashed. Millionaires become bankrupt and banks that had invested their depositor's money lost it. People went crazy and all tried to withdraw money at the same time. The FEDS avoided this scene by assuring consumers that the banks and stock markets would be insured and surpass this.

Some other actions of the government were that the 40 billion emergency spending bills were passed with in a week to aid New York and Washington. The government also benefited from the tax cut bill. This actually had nothing to do with the attack it just happened to become effective at the right time. Prior to 9/11 the Congress passed a tax cut in January and it did not have to be filed for in April of 2002. These checks were sent out and most people received them in late September or early October. This money made it back into the economy just in time.

The Aftermath

Six years later the world is looked at in a different light. Our children will never remember what life was like prior to those attacks. Generations to come will learn about the day that changed America forever. The military men at the airports and excessive baggage checks and security will be normal to the future generations. Stories will be told about how life was prior to 9/11. We will explain that we actually had a sense of security. With all that said America would also remember how our country fought back. We will remember how one becomes all. The time following the attacks everyone learned how wonderful and patriotic our country is.

It will never be forgotten that our world has faced a tragedy, yet we overcame it together with pride. In the past America has overcome wars, natural disasters and other terrorists attacks on a smaller scale. The wonderful thing about the United States is that we learn from our disasters and move forward together.

On a personal note I would like everyone to come together and honor the men and woman who are fighting for our country and freedom as you read this newsletter. Always keep in mind that there is a child that is not able to kiss their mom or dad good night because that person paid the ultimate price for the freedom that we all often times take for granted. We are very fortunate to live in this country where people stand up for what they believe in. God bless all who we lost that day and god bless America.



Got a question? Then contact our Education Team on 561-883-2398 Ex.310 United conducts regular seminars on financial education, including "How to Budget", come along and join us - to reserve your seat contact our Education Team on 561-883-2398 Ex.310

Newsletter 09
Rev.1
September, 2007