September 11: The Economic Fallout

After the terrorist attacks in September 2001, many believed that the U.S. economy would crumble with the Trade Towers. Even more scary was the prospect of a global recession which was anticipated in the event of a U.S. economic breakdown. Our new Read My Lips explores early expectations of what would happen — and examines who was proven right in the end.

Did the terrorists especially aim at the U.S. economy?

“The terrorists chose the targets of their heinous acts to sow fear and economic disruption. We must see that they fail on both counts.

(R. Glenn Hubbard, chairman of U.S. President Bush’s Council of Economic Advisers, September 2001)

How did many people view the economy prior to the attacks?

“The world seemed to be galloping into a rosy future of efficient markets that inexorably sapped power from rigid bureaucrats and ‘big-spending’ politicians.”

(Jim Hoagland, Washington Post columnist, September 2001)

As the trade towers crumbled, did an economic era?

“On September 11, the nineties ended.”

(Tom Ford, designer for Gucci and Yves Saint Laurent, December 2001)

Was the economy one of President George W. Bush's immediate worries?

“The president, of course, cares at all times about the economy, but at a time like this, his first focus is now on the incident.”

(Ari Fleischer, White House spokesman, October 2001)

What did the attacks reveal about capitalism?

“The market — so justly celebrated since the collapse of communism — isn’t good at everything.”

(David Wessel, Wall Street Journal columnist, September 2001)

Were there any alarming economic forecasts?

“The U.S. economy will go into recession as a result of the terrorist attack.”

(Sung Won Sohn, chief economist for Wells Fargo & Co., September 2001)

Was that view shared outside the United States?

“We must prepare for the most difficult scenario.”

(Argentina’s former Economy Minister Domingo Cavallo, October 2001)

How did investors react?

“The ‘patriot rally’ school is moving to the ‘sell everything team’.”

(Robert Stovall, strategist at Prudential, September 2001)

Why did some companies have to lay off workers?

“If you are building $200 million airplanes that nobody wants to buy, you can get into financial trouble really fast.”

(Phil Condit, Chairman of Boeing Co., October 2001)

How did the perception of the United States as a secure investment change?

“Now that the United States has become a target for terrorists, the United States no longer seems a safe haven.”

(Jacob M. Schlesinger, Wall Street Journal reporter, June 2002)

Did some 'old hands' offer a more cautious evaluation?

“Overreaction is a mistake.”

(Robert Rubin, former U.S. Treasury Secretary, October 2001)

Why is that?

"America’s dynamic economy is not located in any one place. Innovation and productivity are found in every factory and farm, every laboratory, every financial institution, every small business — and every home office across America.”

(Paul O’Neill, U.S. Treasury Secretary, September 2001)

Did foreign investors view it the same way?

“The American economy is solid — and I am not selling anything.”

(Prince Alwaleed Bin Talal Bin Abdul Aziz Alsaud, billionaire investor, September 2001)

How did President George W. Bush view the economic fallout?

“The terrorists hoped world markets would collapse — but markets have proven their resiliency and fundamental strength.”

(U.S. President George W. Bush, October 2001)

Economically speaking, what is the task at hand now for the Bush Administration?

“From an economic perspective, the Bush Administration’s job in this situation is to reduce risk. And the way to reduce risk is to actively pursue a strategy of eliminating the enemy.”

(Brian Wesbury, chief economist at Griffin, Kubik, Stephens & Thompson, September 2001)

And finally, what has been an overall evaluation with more hindsight?

"September 11’s economic effects were relatively shallow.”

(Kenneth Rogoff, IMF Chief Economist, May 2002)