Explained in 10 graphics: The economic impact of September 11

By Justin Fox
NEW DELHI: The terrorist attacks of September 11, 2001 and the American reaction to them continue to reverberate. The disorderly withdrawal of the United States from Afghanistan this summer is an obvious aftershock, and it is clear that the impacts go far beyond.
Much of what appears to be broken in America today, writes journalist Spencer Ackerman in his new book “Reign of Terror: How the 9/11 Era Destabilized America and Produced Trump,” can be attributed to the actions and reactions of the early 2000s.
Around the world, according to Norwegian defense specialist Thomas Hegghammer in the latest issue of Foreign Affairs, the surveillance capabilities developed in the aftermath of the attacks have shifted the balance of power towards governments and away from individuals.
The “war on terror” has also accelerated the rise of right-wing violence in the United States and elsewhere, argues American extremism researcher Cynthia-Miller Idriss in the same magazine. Etc.
It is more difficult to find statistical evidence of the lasting effects of September 11th. After a colleague asked me a few weeks ago about the economic changes triggered by the attacks, I started downloading data sets and making charts, as usual. What I found in most economic series was not so much a lack of impact as a fleeting impact, and also a much smaller mark of 9/11 than of the Covid-19 pandemic.
When I looked at things that directly measure response to attacks, such as military spending and employment in the security services, the effects of 9/11 were more lasting, but still seem to have faded in recent years. years.
To some extent, this shows the limitations of the stats, or at least the stats I’ve chosen. Those who attribute transformative effects to September 11 are not necessarily wrong. But on a major event anniversary like this that will generate all kinds of big claims, graphics can provide useful context. Here are 10.
The things that increased
Given that the United States first invaded Afghanistan and then Iraq in response to the September 11 attacks, military spending is an obvious measure to consider. After fiscal 2001, which ended September 30, 2001, it increased markedly as a share of gross domestic product – the standard way to track government spending over time.

During the second half of the 20th century, the share of military spending in GDP mainly declined. So far in the 21 it hasn’t, which seems like a big deal.
However, the long decline appears to have stopped a few years before 9/11, and even at its 21st century heyday in fiscal 2010 (which owes a lot to the 3.1% decline in real GDP over the past year. the previous year, reducing the denominator in the expenditure / GDP calculation) expenditure was still lower than in all but two years from 1941 to 1990 (I left out the years of WWII because that spending over 35% of GDP at the time would make the rest of the graph effectively unreadable).
Much of the security response to September 11 was not strictly military, as new screening procedures and surveillance techniques proliferated nationally. Employment in private investigative and security services in the United States increased sharply in the months following the attacks, although the creation of the Transportation Security Administration and the subsequent federalization of airport security in the early part of the United States. 2002 removed a large portion of these jobs from the private sector.

Such timely monthly data is not available on law enforcement personnel, that the Bureau of Labor Statistics falls back into broader government job categories. The Bureau of Justice Statistics conducts occasional law enforcement employment surveys, which show a sharp increase at the federal level in the 2000s.

There was no evidence of an effect of 9/11 on police services, in part because they had already hired heavily in the second half of the 1990s thanks to funding included in the 1994 Federal Crime Act. , now much criticized. Police employment then fell from 2007 to 2016 (in absolute terms as well as the per capita measures presented here) as state and local government tax revenues collapsed during and after the Great Recession.

Public concern about terrorism naturally increased after the attacks. It remained stubbornly high for the next two decades, if you go by the Gallup polls, which consistently found that between 40% and 50% of Americans are very or somewhat worried about themselves or members. of their families are victims of terrorism.
The web search activity tracked since 2004 by Google, on the other hand, shows a sharp decline in “terrorism” searches since then, although interrupted by occasional spikes around terrorist attacks making the news.

Overall, the decade since the 9/11 attacks has seen the kinds of increases in military spending, security sector employment, and public concern about terrorism that can be expected. ‘wait. But by the 2010s, most of them had plateaued or were in decline.
Things that have fallen
Immediately after 9/11, the attacks appeared to have changed America in many other ways beyond the rise of the security state. It was feared that the economic damage would be severe and lasting. This was not the case.
For aggregate measures like GDP, employment, and the Standard & Poor’s 500 index, it seems to have been so fleeting that I won’t even bother with the charts.
The US economy had already been in recession since March 2001, when the tech bubble deflated and attacks briefly accelerated the slowdown, but by the end of the year GDP was growing again.
The S&P retraced its post-attack losses in less than a month. Stocks began to fall again afterwards and the decline in employment continued into 2003, but other factors such as the bearish technology market and the ‘China shock’ in manufacturing certainly played a part. more important role than September 11.
For specific places and industries, the effects have been more severe. New York City was the main target of the attacks and the airline industry its most obvious economic victim. The trend of the previous quarter century to globalize the US economy was in fact threatened. But things have changed quite quickly on all of these fronts as well.
Immediately after September 11, New York City faltered, losing 112,000 salaried jobs in just two months. In retrospect, those two months now look like a brief acceleration of an already established recessionary downtrend (so brief that I couldn’t annotate it in the chart because it masked the decline), which gave way in 2003 to a long recovery that only stopped briefly for the Great Recession.

The city’s job losses since the start of the Covid-19 pandemic are on a whole different scale, raising legitimate questions about its economic future. The same goes for air travel, for which the seemingly apocalyptic months following September 11 now look like a dud compared to what has happened since March 2020.

The number of international visitors to the United States shows a similar trajectory, but with a much less marked recovery so far this year.

The disruption to the movement of people caused by 9/11 seemed really significant at the time, and it took more than two years for air traffic and almost four for the number of international visitors to recover. But the pandemic has raised far more formidable barriers.
Trade in goods and services, on the other hand, was not more affected last year than in 2000 and 2001 – at least not based on its share of GDP.
In both cases, the traumatic events only accelerated the trade declines that were already underway, but both declines ended up being much less severe than the fall that followed the global financial crisis in 2008 and 2009.

Trade has declined as a percentage of U.S. GDP for most of the past decade, and it has to be assumed that last year’s disruptions to the global supply chain will eventually lead to further declines as some of the production shifts to the foreigner is “relocated”.
The number of international visitors was also stable since the start of 2016. It could be argued, based on these statistics, that the United States’ interconnection with the rest of the world is declining, although it would be difficult to link this directly to September 11.
Perhaps another closer measure of US interdependence provides such a link. The number of refugees admitted by the United States fell sharply after 2001, due to the tightening of screening requirements, then recovered, but never to the average levels of the 1980s and 1990s. Under President Donald Trump, he is fell to new modern lows.

Trump has cut refugee admissions so much in large part because he could. Presidents have almost unilateral control over the number of refugees admitted, which is not the case with most other types of immigration. But his rhetoric about refugees and immigrants in general could also be attributed to 9/11 and the war on terror that followed, in which newcomers, especially from Muslim countries, were treated with a Greatly heightened mistrust by the government and many Americans.
Then again, last month’s airlift from Kabul will certainly lead to a surge in refugee admissions, which can also be attributed directly to 9/11. The reverberations continue, but not always with the effects one would expect.

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