The terrorist attacks on the US of Sept. 11, most people agree, changed everything -- including, it now appears, the economic map of the US. The terrorist attacks are not only tipping the economy into a recession, they have also scrambled the business landscape in places thousands of miles from the destruction. Many cities and regions that had strong growth prospects just three weeks ago no longer do.
"The parts of the country that were holding up well before the attack are going to be nailed by this," said Mark Zandi, chief economist at Economy.com, a forecasting concern in West Chester, Pennsylvania, that analyzed the attacks' implications for The New York Times. Yet the terrorists' punch was so strong that even places reliant on military contracting and telecommunications, which may benefit from the nation's new spending priorities, will be hurt, though to a lesser degree.
It is, of course, too soon to know the scale of the economic damage in any particular place with any precision. But it is no secret that, because the attackers used commercial jets as weapons, the most dramatic economic effects are already being felt in cities most heavily dependent on air travel and the lodging industry: tourist sites catering to fly-in visitors, major convention centers and cities whose airports serve as hubs for the big airlines. The damage is compounded in cities that also have important financial activity.
A few months ago, Las Vegas, Honolulu, Fort Worth, Miami and Orlando, Florida, were enjoying growth, for example. Now, many of their swimming pools shimmer silently and their cavernous convention halls stand empty.
"Recessions are similar in some ways, but they each have different triggers," said David Orr, chief economist at First Union in Charlotte, North Carolina.
The last one, in the early 1990s, was started by a lending crunch in commercial real estate and struck Eastern cities with office towers, he recalled. The one before that, in the early 1980s, was set off by high interest rates and followed by a downturn, spurred by collapsing oil prices that ravaged the oil patch.
This one, economists agree, has a spark no one could have guessed: fear of flying.
"Before the attack, you could draw a line down the map from Detroit to Birmingham, and for 500 miles on either side of that line, you were in a recession," Zandi said. "Now, the economic problems are going to broaden out and engulf the entire country."
In his analysis, Zandi ranked the nation's metropolitan economies, based on their vulnerability in the coming months. He also ranked the cities best positioned to withstand the shock of the attack. The rankings are to some degree based, he cautioned, on assumptions that may ultimately prove false: that there will be no more terrorist attacks in the US, that the Federal Reserve will reduce interest rates by an additional half-point, that the government will continue to provide fiscal stimulus and that energy prices will remain relatively high.
Not a single city of the top 318 metropolitan areas in the ranking will benefit economically from the shock, he added. Every one will be hurt.
But the pain will probably be buffered in communities with colleges -- students tend to stay in school during recessions -- like Waco, Texas; State College, Pennsylvania; and Yolo County, California.
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