On 9/11 anniversary, US faces new economic shock

National Economic Council Director Larry Kudlow discusses coronavirus economic and employment recovery, U.S.-China relations and the Trump administration’s efforts to rebuild the economy, and also responds to economist Paul Romer calling him a liar.

On the 19th anniversary of the Sept. 11, 2001, terrorist attacks that devastated the nation, the U.S. is dealing with a completely different unexpected crisis, which once again has the economy reeling and lawmakers searching for ways to provide immediate relief.

But just as the events that precipitated the devastation were different, the economic impacts have been, too.

“With 9-11, the direct economic fallout was much less severe,” Matt Dallek, political historian and professor of political management at The George Washington University, told FOX Business. “The economic crisis that we continue to be in as a society is far worse than anything that happened to the economy after 9-11.”

The Sept. 11 terrorist attacks resulted in the loss of about 143,000 jobs per month over the course of three months, which piled on top of an ongoing recession, according to data from the Federal Reserve.

It is estimated that 22 million U.S. jobs were lost as a result of the coronavirus pandemic, and less than half of which have been recovered so far.

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One of the other key economic differences between the two events is that the “immediate” effects of the Sept. 11 terrorist attack were over by the following month, according to the Federal Reserve Bank of St. Louis, whereas the U.S. is still combating a coronavirus-induced recession that began in February.

The attacks reduced U.S. GDP in 2001 by about 0.5 percent. Meanwhile, the International Monetary Fund estimated that domestic output in 2020 could contract by 8 percent.

To be sure, in 2001 the loss of life was concentrated in specific areas of the U.S., whereas the coronavirus pandemic has caused death throughout the country, Dallek pointed out.

But in both cases, the government responded immediately with big spending projects.

“Certainly after 9-11 the federal government spent an incredible amount of money,” Dallek said.

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Researchers at the St. Louis Fed said the value of the World Trade Center, damage at the Pentagon and associated destruction was estimated between $10 billion and $70 billion.

About $25 billion has been invested in reconstruction of One World Trade, according to Reuters.

However, there were other long-term costs related to the attacks, including a revamp of the country’s national security infrastructure.

Dallek pointed to the creation of the TSA, DHS, the airline bailout, the Victim’s Compensation Fund, and funding sent to state and local police, fire and first responder units, as some of the more expensive items.

The attacks also precipitated two wars.

While the pandemic is ongoing, the Congressional Budget Office has estimated that it will end up costing the U.S. economy around $7.9 trillion through 2030, taking into account the vast amounts of money the government has spent on relief efforts. Those include everything from loans made to small businesses to direct payments sent to American households.

In both instances, the Federal Reserve also stepped in to provide liquidity to the markets, as a means to support firms and people.

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But the U.S. recovery from the coronavirus pandemic may be stunted by limited consumer activity.

In both instances, people wanted to resume their everyday activities, and they have largely been unable to do so for months because of the pandemic, which has forced businesses and schools to close. The risk of contracting the virus is still prevalent and grave, especially for older people and those with preexisting conditions.

“There’s no true economic recovery when you have [thousands] of cases per day because there are just too many activities that you can’t resume,” Dallek said. “You just can’t get back to the sort of economic activity that one would see.”

Still, many are hopeful for the future. Developer Larry Silverstein, who is behind the redevelopment of the One World Trade complex, told Reuters that he believes the economy will revive – just as it did after the Sept. 11 terrorist attacks.