The degree of damage from the September 11 terrorist attacks on the World Trade Center is unprecedented in the United States. Damage will total at least twice that of the most expensive previous U.S. disaster (Hurricane Andrew in 1992 cost an estimated $25 billion), and some analysts estimate the total at more than three times greater. Approximately 30% of all the commercial space available in lower Manhattan was destroyed or damaged. And this does not count the additional damage done to the City’s infrastructure in Lower Manhattan, to residential properties located there, and to the small business community of retail and personal services that existed to support the financial services firms located there.

This report focuses on the immediate impact of September 11, both to the City and the State of New York. We assess the impact on economic activity for both, as well as the impact on the State’s tax revenues. Our focus is on determining the employment impact, particularly on the number of jobs that have left New York State or are likely to leave in the nearby future. During the fourth quarter of 2001 New York State lost an estimated 100,000 jobs. Our analysis centers on the financial services sector in this regard. We also consider the impact to the important tourist and travel sectors of both the City and the State. Using the DRI·WEFA econometric models of New York City and New York State, we estimate the total impact on employment and incomes—this encompasses the direct impacts, the secondary effects they imply, as well as the effects from the national economic recession which has clearly accelerated in the wake of September 11. This preliminary analysis is based on the DRI·WEFA macroeconomic forecast of November 2001, and it will be updated in February 2002.

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