The terrorist attack had a profound impact on the economy of New York City, Washington DC and the nation. Labor markets, financial markets, transportation and small businesses were dramatically affected. While the nation suffered the emotional grief of more than 3,000 lives lost, it also suffered the loss of productivity. Remarkably, the nation’s businesses recovered from setbacks caused by the attack 23 straight quarters of economic growth. Still, there has been an adverse affect on U.S. productivity growth as resources have been diverted to ensure and insure the security of production, distribution, finance, and communication.

Some numbers on the damage and collateral damage.

According to Report to Congress on the Economic Effects of 9/11 published in 2002,

“The 9/11 attacks dislocated, disrupted or destroyed nearly 18,000 businesses—the vast majority being small businesses—in and around New York City’s World Trade Center (WTC) complex. Economic disruption quickly spread to countless firms across the United States.”

Small businesses are particularly vulnerable to the affects of a disaster as noted in the study.

• “Compared to large firms, small ones seem to be particularly vulnerable to disaster impacts and losses. Small businesses tend to have inadequate cash reserves, are less able to raise capital, and generally are unprepared to cope with disasters and their effects.”
• “Small firms forced to temporarily close typically face immediate cash flow problems and, thus, need to resume quickly operations in order to remain viable. The longer it takes business enterprises to recover, the larger the impact on the revenue-generating power of local governments because local jurisdictions depend on sales and property taxes. Prolonged business disruptions have the potential for jeopardizing community-financed services such as public works and economic development initiatives.”

Nevertheless, despite all they could do, some business in lower Manhattan still struggle to survive after the loss. Listen to an NPR story on the five year anniversary of September 11 and how small business in lower Manhattan are faring.

A June 2004 study by the Bureau of Labor Statistics stated the productivity loss in New York City.

 “Within the city, the attack resulted in about 430,000 lost job months and a loss in wages of $2.8 billion. These lost job months were equivalent to approximately 143,000 jobs, each month, for 3 months. The effect of 9/11 was centered on the city’s “export” economy, which represented 68 percent of all lost job months and 86 percent of all lost wages.”

A study commissioned by the New York Foundation of the Arts, found that of the 150,000 artists and entertainers in New York City,

• 22% of respondents became unemployed;
• 66% lost sales/income;
• 69% lost business opportunities/independent contractor jobs.

However, just as a nation and in particular, New York City refused capitulate to the threat of terrorism, business have been equally resilient.

For example, the attacks on the World Trade Center occurred at the center of national and world financial markets. Immediately after the attacks, critical aspects of the infrastructure that enables checks to clear had ceased to function. A potential financial crisis could have followed such a disaster. Credit markets could have tightened, and other financial markets could have suffered irreparable loss. However, fears of a financial crisis proved to be unfounded.

“Trading in U.S. Treasury securities resumed September 13; futures and options markets in Chicago reopened September 14; and stock markets reopened September 17.”

The damage on September 11, 2001 was real to lives and to business. But as we look back today, the proof of character of our nation lies in our ability to look forward with hope and through our collective effort, rebuild. Well done.