Terrorist Attacks May Lead To Stronger Economic Rebound.

The terrorist attacks on Sept. 11 were a setback to the American economy that was poised for a rebound from 14 months of slowing economic growth. The severe disruptions to the financial center of New York City and the airline industry have raised serious concerns about the immediate and long-term consequences of the attacks on economic growth. The Employment Policy Foundation’s (EPF) Employment Trends report released today shows these tragic attacks may in fact create a stronger economic recovery in the future.

“The attacks have not changed the fundamental realities of innovation, competitiveness and productive capacity that are the strengths of the American economy,” said EPF President Ed Potter. “Disruptions in the financial and airline industries may lead to a brief economic contraction, but the magnitude of fiscal and monetary stimulus proposals and the impact of reconstruction are likely to result in stronger expansion and more rapid recovery in 2002 than had previously been expected.”

In employment terms, the New York City attack highlights that the city is a critical center of financial and management activity for business operations around the world. The city’s 4.1 million workers comprise 2.9 percent of the U.S. labor force – one in every 35 American workers works there. More importantly, the city accounts for nearly 1 million jobs in the critical insurance, banking, financial markets, business services and professional services industries. The concentration of these industries in New York City is 87 percent greater than their concentration in the general economy.

The use of commercial jets as weapons has had a chilling effect on an airline industry that already was suffering financially from the prolonged economic slowdown. In August, more than 989,000 people were employed directly in the air transportation industry and 428,000 were employed in the related aircraft manufacturing industry. The total – more than 1.4 million – accounts for 1 percent of American jobs.

“Despite the economic significance of New York City’s financial center and of the airline industry, the terrorist strategy of economic warfare is likely to fail,” Potter said. The reasons:

The U.S. budget surplus assures that public resources are available to rebuild New York City and to improve the U.S. transportation infrastructure.

Companies affected by the tragedy have already shown their ability to return to operation through back-up facilities already in place elsewhere.

America’s competitive market economy ensures multiple avenues for rapid response and reconstruction in the aftermath of the attacks.

The attack did not decrease the demand for critical financial and business services.

Construction and employment gains in the New York City and Washington areas are likely to be offset by job gains as resources are mobilized to recover and rebuild.

Current employment levels in protective services occupations – 581,000 private sector and 2.4 million public sector jobs – may be multiplied significantly.

Additional positive employment impacts will occur as telecommunications, specialized security technology, aerospace and alternative transportation modes expand to provide substitutes for cutbacks in air transportation services.

For an EPF’s complete Employment Trends report CLICK below (Adobe Acrobat reader required):

http://www.epf.org/research/newsletters/2001/et20010926.pdf