When hijacked planes impacted in the World Trade Center on September 11, a symbol of U.S. economic strength came crashing to the ground. The attacks weren't just symbolic, however. They left the economy itself shaken and on unstable ground.
     The country felt the economic aftershocks of the attacks. For many weeks, Americans were afraid to fly. Families canceled vacations; businesses postponed conferences. Airports looked like ghost towns; hotels were half-empty; restaurants, movie theaters, and shopping malls were deserted. 
Local tourism industry leaders around the country worried about the long-term effects of the terrorist attacks on the airline industry and an already hurt economy. Still full of grief, travelers just didn't feel like leaving home.
     As a result, thousands of Americans lost their jobs. The airline industry suffered massive laid-offs. Countless hotel workers were forced to take pay cuts or to leave their jobs. According to the U.S. Labor Department, new claims for unemployment benefits for the week ending September 29 were the highest in nine years. According to the U.S. Department of Labor, U.S. payrolls dropped by 199,000 in September, the biggest drop in more than 10 years. It was the largest number of job cuts since 259,000 in February 1991, when the United States was fighting the Gulf War and in the middle of a recession.
     High unemployment wasn't the only negative economic effect from September 11. People were not only afraid to fly but also to spend money. The Consumer Confidence Index for September tumbled to 105, compared to 114.3 in August. The Consumer Confidence Index is a survey of 5,000 carefully selected households that measures willingness to spend money. The index is based on consumer confidence in 1985, which is set at 100.
     High consumer confidence means people are more willing to spend money. Economists say it also means consumers are relatively secure that they will not lose their jobs or income in the near future.
People's willingness to spend is crucial to the economy, since consumer spending accounts for almost two-thirds of the nation's economic activity. When people spend more money, companies generally sell more products, make more profits, and tend to employ more people. And the more money people earn, the more they tend to buy, or consume, creating more jobs and more money to spend.
     The rush of last minute shopping helped slightly; but low prices have left profit margins low and nonexistent. The combination of all the factors mentioned above decreased consumer-spending habits in the critically important selling period between Thanksgiving and New Year's; that usually accounts for 25 percent of annual sales.  To keep consumers spending despite mounting job cuts, the Federal Reserve cut its target for short-term interest rates 11 times in 2001.

Sector Announced Layoffs Sept. 12, 2001-Jan. 21, 2002
Transportation 139,215
Hospitality, Tourism, Entertainment 139,840
Communications & Utilities 132,096
Manufacturing 426,948
Retail Trade 45,706
Services 50,530
Finance, Insurance and Real Estate 67,735
Public Administration 48,343
Other 4,240
Totals 1,054,653
Source: Company press releases, websites and media reports. Compiled by AFL-CIO researchers.
 
 

References

Families USA The Voice for Health Care Consumers. December 27, 2001 found at http://www.familiesusa.org/media/press/2001/lostjobs.htm

Economic Crisis Grows, Relief Blocked by Republicans Manufacturing Hardest Hit as Economy Shrinks. The American Federation of Labor and Congress of Industrial Organizations. January 21, 2002.  http://www.aflcio.org/sept_11/econchart.htm#table

News releases from the U.S. Department of Labor are accessible on the Internet at: http://www.dol.gov and http://www.workforcesecurity.doleta.gov

http://money.cnn.com/2001/12/28/economy/economy/index.htm

http://www.pbs.org/newshour/