Economic Effects Of 9/11

On September 11, 2001, the United States of America (USA) was subjected to the most catastrophic terrorist attack in the history of the nation. The Islamic group al-Qaeda hijacked four commercial airliners with the intent to carry out suicide attacks on influential staples of American life. Two planes were flown into the Twin Towers, one into the Pentagon, and one crashed into a field outside Pennsylvania with its intended target being the White House. In total, 2,996 people were killed, 6,000 others injured, and at least $10 billion lost in infrastructure and property damage. The 9/11 attacks led to mass economic losses for the United States as a result of its impact to the financial markets, key economic sectors, and the creation of the War

The NYSE remained closed until September 17, marking the third time in history that the exchange has ever been shut down. Regardless of the attempts, the US financial markets plummeted as a result of the widespread fear and uncertainty plaguing the nation. When the NYSE began trading for the first time following the attacks, the market fell 684 points, the equivalent of a 7.1% decline. This set the record for the largest loss in exchange history for a single trading day. Moreover, at the culmination of the trading week, the Dow Jones had fallen almost 1,370 points (loss of over 14%) and the Standards and Poor’s index fell 11.6% ($1.4 trillion). Following a week of the largest losses in NYSE history, severe stock sell-offs hit the airline and insurance

American Airlines and United Airlines were the airliners whose planes were hijacked in carrying out the attacks. Following the reopening of airports after the attacks, the general public was still uncertain of air travel, causing a 30% decrease in demand for airline tickets in the initial shock period occurring. As a result, congress created the Air Transportation Stabilization Board (ATSB) on September 22, 2001. The board was created for the purpose of issuing federal loans that guaranteed up to $10 billion to airlines experiencing following the terrorist attacks. Despite the government-funded efforts, both United Airlines and American Airlines declared bankruptcy soon-after the attacks. American Airlines saw stock fall 39%, while United Airline’s stock plummeted 42%. This contributed to the estimated loss of $7 billion that the airline industry experienced in 2001 alone. Losses were not only felt in the airline sector, there were major drop-offs for the insurance sector as well. The insurance industry felt losses that totaled close to $31.6 billion when taking all claims into account following 9/11. Therefore, the Terrorism Risk Insurance Act (TRIA) was passed on November 26, 2002 in an effort to help share losses between the insurance industry and the federal government. This was a necessity as premiums were becoming too expensive for individuals and businesses to acquire