Six days after the Twin Towers toppled, investors uncovered more than rubble in the midst of Ground Zero. As the markets plunged the day they re-opened, Wall Street knew the attacks had marked the return of a bear silenced during the previous, prosperous decade.
Risk had returned, slapping the invisible hand that guided the economy and, more importantly, the millions of consumers who directed that hand.
"The market kind of summarizes the opinions and assessments of many, many people about the prospect of the future," said Gary Santoni, a George and Francis Ball Distinguished Professor of Economics. "Clearly, Sept. 11 was a big surprise event."
As Americans feared reprisals and an unprecedented war on terror, future profit, no longer seemed as guaranteed as before.
"Businesses hate uncertainty," said Economics Professor Cecil Bohanon.
But to gauge the complete economic ramifications a year later is premature, said Pat Barkey, the director of economics and policy study. While a one-year anniversary is a convenient milestone, "We're still in the middle of everything," he said.
Quantifying the damages of the attacks is also complicated by the fact that the market had already declined by about 28 percent since its peak in March in 2000, including a drop in business spending which has particularly hurt Indiana's economy, Barkey said.
Still, no one believes the attacks had no effect. Since Sept. 10, two major market indicators have fallen by more than 10 percent. Both have a ways to go to return to mid-March highs.
The security measures undertaken also raised the cost of transporting goods, raising transaction costs by about 1 or 2 percent, Bohanon said.
Though that doesn't seem high, he said, it still constitutes a drag.
"It's like you set the economy, technology wise, back a few years," he said.
Yet, the dark economic cloud has a rather vibrant silver lining, Bohanon said, and the economy has proven itself more resilient than most thought. According to statistics from Barkey, consumer spending, after accounting for inflation, has increased slightly over Sept. 11 numbers during the first two quarters of 2002.
The Associated Press is reporting record-low interest rates, and unemployment, though a burgeoning concern, has not ballooned as severely as previous thought.
According to the AP, the Milken Institute in Santa Barbara, Calif., estimated 1.6 million jobs would be eliminated nationwide. They are now estimating reductions closer to 1.2 million jobs.
Faculty at Ball State also reported a record number of interns. Sheryl Swingley, journalism instructor and internship coordinator, reported an increase in interns this summer compared to last summer, though about three newspapers stopped offering paid internships.
And other college officials are telling similar stories.
"We're going on with life," Swingley said. "We're doing what the president asked us to do."
And eventually, Santoni said, the market will recover, though it may take about eight years to happen, he said.
"Certainly I'm hoping not, and I suppose it won't take quite as long this time," he said.
But Santoni said he believes the market will not only rebound, but ultimately thrive.
America's economic history is littered with economic downturns, and Sept. 11 does not rank as the champion. On Oct. 19, 1987, the Dow dropped more than 22 percent. The day Richard Nixon resigned as president, the market fell about 11 percent.
Before that, the market dropped about 5 percent the month following Pearl Harbor. The month after the United States officially joined World War I, it lowered by 6.5 percent.
Today, those events are dips in an otherwise uphill path. Annually, the market has increased by an average of about 10 percent each year, Santoni said.
"I'm betting on history," he said.
Regardless of the market's fate, Bohanon said Sept. 11 may no longer play an important role in determining its future - provided there is not another attack.
Now, the day to consider is Dec. 5, 2001 - the day Enron declared bankruptcy.
With that announcement, the economy and the market began wading through the slew of accounting scandals.
Consumers are also investing while President Bush and Congress debate the notion of war against Iraq, potentially another unstable curve ball to throw at businessmen, Bohanon said.
One certainty may be found, however, in an otherwise uncertain ocean. The government's involvement in the economy has grown, and probably will stay so.
"The nature of organizations is, once they're created, they survive," Barkey said. "Bureaucracy has a way of surviving."
In fact, as unemployment woes continue to waft throughout the nation, numbers released by the government Sept. 6 show another 20,000 jobs were created in the federal government.
The size of the national government may decline as the threat against the nation deteriorates, but when that will happen is anyone's guess, and Barkey said he doubts the Bureaucracy will return to pre-Sept. 11 levels.
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