The Sept. 11 attacks in New York and Washington had little to no effect on the U.S. economy, according to local economic experts.

“The economy was in trouble before Sept. 11,” said Virginia Blackburn, associate professor of management. “Sept. 11 pushed industries over the edge, such as airlines, cruise industries – all travel industries.”

The trouble with the economy began in May 2000 with the dot-com bust, she said. “A lot of people lost a lot of money in that,” Blackburn said. “There was a trickle-over effect into other investments – into larger investments.”

A recession had hit the U.S. economy in March 2001, which was months before the attacks, according to the National Bureau of Economic Research.

Immediately after the attacks, which occurred in the third quarter of 2001, gross domestic product – the broadest measure of economic activity – shrank slightly, then rebounded in the fourth quarter. Gross domestic product data states the economy was worse before the attacks.

“Within three days of the attacks, the market went back up and regained its previous levels,” Blackburn said.

In Ames, retail sales had been going up steadily for 10 years before Sept. 11, said David Maahs, executive director of the Ames Chamber of Commerce.

“I think the economy was fairly slow [around Sept. 11] because of impacts from national and state economy . Retail spending was flat,” he said. Exact figures of retail spending in Ames for fiscal year 2002 will not be released until next year, according to ISU Extension Services.

Anniversary impact

For this week’s anniversary of the attacks, Blackburn said she does not foresee a large effect on the economy, but people may be hesitant to go about their daily activities.

“I think on Sept. 11 you’ll see people buying less, going out less,” Blackburn said. “People are afraid we’re in a double-digit recession, plus the potential war with Iraq – it’s those kinds of things that affect the economy.”

Maahs said he doesn’t know what to expect on Wednesday.

“I do think there are going to be events going on throughout the community that people will be focused on – celebrating and remembering,” he said. “People might be focused on remembering, so that might have an impact on sales, but I can’t be too sure.”

Profitable businesses

“War itself can create opportunities in the defense industry,” Blackburn said. “Plenty of companies do very well in times of uncertainty, such as construction companies.”

The Sept. 11 attacks caused an estimated $40 billion in property damage. In New York, it will cost up to $22 billion to replace the World Trade Center. The attack on the Pentagon in Washington has cost an estimated $700 million.

Defense spending also contributed to the gross domestic product. Including the war in Afghanistan, the Bush administration has spent $70 billion on homeland security and defense measures. Military costs are estimated between $1.5 and $2 billion per month in Afghanistan, the government providing no date for withdrawal.

End in sight?

There may not be an answer soon of when the economy will recover, Blackburn said.

“I think things are pretty gloomy,” she said. “I tend to be very pessimistic about where the economy is.

“But it’s not just because of terrorism. It’s the fact that we’re in an enormous amount of personal and corporate debt.”

First, businesses that are involved in corporate scandals, such as WorldCom and Enron, must straighten out its financial situations, she said. Then the economy might be able to recover.

“I think it could get a whole lot worse before it gets better,” Blackburn said.