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The Cost

listenRetailers May See Relief Ahead, Analysts Say
According to the Commerce Department, retail sales took their biggest drop in nearly 10 years last month. But there is reason to believe the slump in consumer spending may improve. NPR's Jack Speer reports for Weekend All Things Considered.  Oct. 13, 2001.

Terrorist Attacks Take Far-Reaching Toll on U.S. Economy

Workers at World Trade Center site

Workers stand in the rubble at the World Trade Center site. Oct. 1, 2001.
Photo: © Reuters 2001

The economic toll of the Sept. 11, 2001, terrorist attacks was dramatic and widespread. The fallout ranged from the airlines, whose business suffered so much they required an emergency $15 billion federal bailout, to the tens of billions in anticipated insurance payouts related to the attacks on the World Trade Center and Pentagon.

The stock market was closed for four days after the attacks, giving New York's financial district time to recover. Even though the Federal Reserve cut short-term interest rates by one-half percentage point just before the market reopened on Sept. 17, the Dow Jones Industrial Average dove 684 points. The Fed cut rates again at its next meeting in early October, and the markets recovered much of their lost ground within a month of the attacks.

Even before the attacks, the Fed had been cutting interest rates aggressively in hopes of averting a recession. The attacks rattled consumer confidence and uncertainties about the job market kept shoppers away from the malls.

Nowhere were layoffs more evident than in the airline industry and Boeing, which together announced more than 100,000 job cuts. Hotels, restaurants and other tourist-related industries also saw steep declines in business because of the public's reluctance to fly following the attacks.

In New York City, businesses whose offices were destroyed or displaced by the attacks scrambled to relocate and real estate values slid as some affected firms were considering moving out of Manhattan.

The attacks also had an impact on the federal budget. In addition to the airline bailout, Congress approved $40 billion to help the immediate recovery from the attacks and was considering up to $75 billion in tax cuts and other forms of economic stimulus. The extra spending was expected to move the budget into deficit for the first time in several years.

Read how officials began gauging the costs the day after the attacks, Sept. 12, 2001.