How the 9/11 Attacks Still Affect the Economy Today

Twin Towers Of Light Shine Over New York On 9/11 Anniversary
Twin towers of light shine over New York on 9/11 anniversary. Photo: Michael Bocchieri/Getty Images News/Getty Images

The 9/11 attacks had both immediate and long-term economic impacts, some of which continue to this day. The attacks caused the Dow to drop more than 600 points and the 2001 recession to deepen. It also led to one of the biggest government spending programs in U.S. history, the War on Terror.

9/11 Attack Facts

On the morning of September 11th, terrorists hijacked four planes at Boston's Logan airport.

They chose planes headed for the West Coast because they would be loaded with fuel. They planned to cripple the U.S. economy by destroying three centers of power: Wall Street, the Pentagon, and the White House.

The first two planes hit their targets. American Airlines Flight 11 crashed into Tower One of the World Trade Center at 8:46 am. United Airlines Flight 175 crashed into Tower Two at 9:03 am. By 10:05 am, millions of television viewers saw Tower Two collapse, and Tower One follow it at 10:28 am. Tower 7 collapsed at 5:20 pm.

American Airlines Flight 77 crashed into the Pentagon at 9:37 AM. The building collapsed at 10:10 am.

United Airlines Flight 93 never made it to the White House. At 9:23 am, after the World Trade Tower crashed, dispatcher Ed Ballinger texted all flights he was following, including Flight 93, "Beware any cockpit intrusion two a/c hit World Trade Center." Five minutes later, the terrorists killed the pilots and took control of the plan.

By that time, at least ten of the passengers had talked to loved ones via cell phone. They heard about the World Trade Tower attacks and figured out their likely fate. At 9:57, the brave passengers attacked the terrorists. Flight 93 crashed into the fields of Pennsylvania at 10:03 am, killing all 30 people aboard.

9/11 Death Toll

The total death toll of 2,975 surpassed that at Pearl Harbor in December 1941. That included 2,600 people at the World Trade Center, 125 at the Pentagon and 256 on the four planes.(Source: "9/11 Commission Report," National Commission on Terrorists Attacks Upon the United States. "Official 9/11 Death Toll Climbs by One," CBS News, September 10, 2009.)

2001 Recession

The stock market closed for four trading days after the attacks, the first time since the Great Depression. (In March 1933, President Franklin D. Roosevelt closed the markets for two days, as part of a bank holiday to prevent a run on the banks.) The stock market reopened on September 17, 2001. The Dow promptly fell 7.13 percent, closing at 8,920.70. The 617.78 point loss was the Dow's worst one-day drop ever.

The 9/11 attacks aggravated the 2001 recession, which started in March 2001. The economy had contracted 1.3 percent in the first quarter but had bounced up 2.7 percent in the second quarter. The attacks made the economy contract 1.1 percent in the third quarter, extending the recession. The 2001 recession was caused by the Y2K scare, which created a boom and subsequent bust in internet businesses.

Although the recession ended in November 2001, the threats of war drove the Dow down for another year.

It hit bottom on October 9, 2002, when it closed at 7,286.27. That was a 37.8 percent decline from its peak. No one knew for sure if the bull market had resumed until the Dow hit a higher low on March 11, 2003, closing at 7,524.06. Unemployment continued to climb until June 2003, when it reached 6 percent. That was the peak of that recession.

War on Terror

During a September 20 speech, President Bush called for the War on Terror. He said, “Americans should not expect one battle but a lengthy campaign, unlike any other we have ever seen.” Then he put it into action.

Bush launched the War in Afghanistan to find and bring to justice Osama bin Laden. He was the head of the al-Qaida organization that launched the 9/11 attacks. The War did not cost much initially –- $20 billion, plus $13 billion to launch Homeland Security.

On March 21, 2003, President Bush sent troops into Iraq. He said the CIA had found weapons of mass destruction. He added that Iraq's leader, Saddam Hussein, was aiding al-Qaida operatives. In its first year, the War in Iraq cost $50 billion compared to $30 billion for the Afghanistan War. And the costs kept mounting. By the end of Bush's term in office, the War on Terror cost $864.82 billion. That was added to increased spending for the Defense Department and Homeland Security.

President Obama spent even more for the War on Terror, although he didn't call it that. During his eight-year term, military spending was $857 billion. That was almost as much as Bush spent on the War on Terror initiative ($921 billion). The combined War on Terror costs were $1.8 trillion. That was just for Overseas Contingencies Operations. It doesn't count all military spending, which was $523.9 billion in FY 2017 alone.

Debt Crisis

The biggest economic impact of the 9/11 attacks was how the increased defense spending led to the U.S. debt crisis. Without the War on Terror, the debt would be $16.2 trillion or less ($18 trillion minus $1.8 trillion. The War on Terror meant that fewer funds were available for stimulus programs to boost the country out of the 2008 financial crisis. Fewer jobs were created, which meant less tax revenue, further increasing the debt. That also meant less funding for infrastructure repair and replacement.

High debt levels became a crisis in 2011, where tea party Republicans balked at raising the debt ceiling. Instead of cutting military spending, they called for severely limiting Medicare benefits. That led to the first-ever downgrade of U.S. debt by Standard and Poors.

In 2013, they again refused to raise the debt ceiling, or fund the government. It led to a 16-day shutdown, and global fears the U.S. would default. Instead of focusing on job creation, they focused on austerity measures. That kept economic growth lackluster.