Costliest disaster in US history
Financial toll passes $60 billion, reaching from wreckage and airport downtime to lower productivity and lost taxes.
NEW YORK — Never has so little cost so much.
The 19 hijackers and their accomplices had modest expenses: rental cars, motel rooms, and about $50,000 for airline tickets on Sept. 11. A few attended flight school.
But in one short week, their terrible attacks have taken an astonishing financial toll: perhaps $60 billion already in direct costs to the US economy - plus well over $600 billion in stock-market losses.
Boston cab driver Jamal Khudari measures his losses in metered time -or lack thereof. He has been waiting two hours instead of 10 minutes between customers, thanks to a plunge in air traffic.
Similar effects large and small mount with each passing day:
In Seattle, jetmaker Boeing may have to lay off 30,000 workers, even as the nation's airlines cut as many as 100,000 jobs.
In New York, $15 billion or so damage at ground zero is just the start. Advertisers have lost perhaps $500 million because of TV networks covering the tragedy without commercials.
After missing a key weekend, the National Football League stands to lose $50 million or more per game if it can't squeeze events, such as wildcard playoffs, into a revamped schedule.
"Clearly, in the short run, it is creating a lot of downward momentum," says Sung Won Sohn, chief economist for Wells Fargo Banks in Minneapolis.
The hijackers' bombings of the World Trade Center and the Pentagon have thus become the most expensive catastrophe in the nation's history - far eclipsing Hurricane Andrew, which cost $15 billion after it hit in 1992.
The ripple effects go well beyond lost sales and resulting layoffs. Productivity is expected to drop as businesses devote more attention to security and to helping workers cope with new worries about jobs in high-rises.
The implications are large for governments and taxpayers, too.
States and cities see revenues falling on everything from sales taxes to airport-excise levies.
Spending on the military is slated to soar. While such spending adds to the gross domestic product, it also could put upward pressure on interest rates in the future by adding to federal debt.
A difference of scope
Normally, disasters don't have much impact on the whole nation's economy. A hurricane might just hit Florida. An earthquake could disrupt California. Part of the nation's strength is its diverse economic mix, and disasters sometimes have the effect of stimulating the economy as rebuilding proceeds.
But this time, economists say, it's different. This is a nationwide disruption from coast to coast. Everyone is reeling - from media companies to securities brokers to the tourism industry.
Mark Zandi, an economist with The Economy.com, estimates the strike will take one full percentage point off US economic growth in the third quarter.
Already, companies around the nation are laying off employees because of the disaster. As airlines make work-force cuts of as much as 20 percent, the job losses will likely spread to the thousands of caterers, taxi companies, and others who rely on the industry.
For every 1 percent rise in unemployment, the US government loses $40 billion in tax revenues.
It's not hard to see how the economy stopped in its tracks.
Take, for example, the nation's $80 billion meeting and conference business, which employs 1.5 million people. Conferences have been cancelled, such as the annual expo held by the Personal Communications Industry Association set for last week.
Of course, some businesses hope to make up their lost revenue. Air Host, a Memphis, Tenn., operator of airport snack bars, figures that with people arriving two or three hours early at airports, it may recoup some of the $50,000 it lost last week.
"They may buy a soda or a cup a coffee, a Danish or a newspaper," says Tony Pierce of Air Host.
But all that waiting around in airports won't help America's productivity. David Wyss, an economist at Standard & Poor's, estimates lost productivity could cost the economy 1 to 1-1/2 percentage points in GDP.
At Audium, a high-tech startup in New York's SoHo area, loss of productivity has been critical. It didn't lose infrastructure or people, but co-founder John Oh figures the company lost $75,000 from down time - a devastating hit for a software business that is still in its early, high-risk phase.
"The bottom line is, it's taken two weeks of normal productivity and thrown it completely out of whack," Mr. Oh says.
For transport-related businesses, the downturn has been especially sharp. Demers Brothers Trucking in Attleboro, Mass., had to default on contracts because of the confusion over security and rumors that the price of diesel is soaring. "Everything's at a standstill," says Jim Leary.
It's not just business that's going to get more expensive. Stanley Collender, a budget analyst in Washington, estimates that federal defense spending will rise by $50 billion a year.
In addition, no one knows how large a bailout the government will have to do for the airlines, airports, and communities affected. This could cost another $25 billion to $35 billion.