MALONEY: FED RESERVE STUDY OF 9/11 HIGHLIGHTS NEED FOR IMMEDIATE REBUILDING

Apr 24, 2002
Press Release

NEW YORK: At the request of Congresswoman Carolyn Maloney (Manhattan, Queens) and 10 other members of Congress, the Federal Reserve Bank of New York has produced the first analysis by a federal agency of the financial impact and estimated future costs of the September 11th terrorist attacks on New York.

The study notes a drop in estimated costs for rebuilding the financial district, but it also emphasizes the vital need for increased safety precautions and expedited restorations to the city's transportation, communications and power infrastructure to reduce pressures on city-based firms to move out of the city.

"The need for accelerated rebuilding is the major point coming out of this report," said Maloney. "It underscores why many of us in Congress urged the immediate delivery of pledged federal aid to the city, because delays in rebuilding could threaten the long-term economic health of New York."

The study estimates rebuilding the World Trade Center at between $26 and $29 billion, down from earlier estimates of $35 billion. But the report also details more than $10 billion in lost tax revenue for the city and state, and declines in private sector and city employment of between 50,000 and 100,000. The report states, "efforts to address current budget deficits at both the city and state levels could entail policies that may lead to a long-term decline in the attractiveness of the city."

Rep. Maloney said, "Federal aid to New York has been helpful so far, but it still doesn't cover the billions in lost revenue to the city and state. New York still needs more help to be made whole." The study also details losses in finance, insurance, and real estate industries as well as in travel and tourism, manufacturing, entertainment and dining, and publishing.

"I want to personally thank William McDonough, President of the Federal Reserve Bank of New York, and those who worked to produce this important study," said Maloney. "This is a significant contribution toward our understanding of New York's present and future needs for recovery."

Key points from the Federal Reserve Study are highlighted on the following page and may also be accessed at https://maloney.house.gov/sites/maloney.house.gov/files/documents/olddocs/FederalReserve.pdf

 

Members of Congress joining Rep. Maloney in requesting the Federal Reserve analysis of 9/11 economic impacts on New York: Gary Ackerman, Eliot Engel, Maurice Hinchey, Nita Lowey, Michael McNulty, Jerold Nadler, Major Owens, Charles Rangel, Jose Serrano, and Edolphus Towns.

 

Key Findings of Federal Reserve Bank of New York Analysis of April 18, 2002:

IMPACT OF THE WTC ATTACK ON THE NEW YORK CITY ECONOMY(As Summarized by the Office of Congresswoman Carolyn B. Maloney)

OVERALL ECONOMIC COSTS AND LOSSES FROM 9/11

$10 billion to $14 billion - Uninsured expenses related to the cleanup and replacement/repair of buildings and infrastructure

$6 billion to $10 billion - clean up and site restoration

$6.7 billion - replacing the World Trade Center Towers

$6 billion - repairing all other damaged buildings, retail space, transportation, communications, and power infrastructure

$6.6 billion - replacing destroyed technology and fixtures

$15 billion - expected private insurance coverage

(assuming determination that the WTC attack was two incidents)

$10 billion to $14 billion - uninsured physical losses

$6 billion - human capital losses

JOB LOSSES

100,000 - amount of reported displaced city workers from 9/11

50,000 - decline in private-sector employment prior to 9/11

50,000 - additional decline in private-sector employment immediately after 9/11

20,000 - additional decline in private-sector employment in first two months of 2002

SECTOR IMPACTS

Finance, Insurance, and Real Estate industries

20,000 - estimated lost jobs in finance, insurance, and real estate industries as a result of 9/11

$3 billion - estimated lost earnings as finance, insurance, and real estate industries as a result of 9/11

 

Travel and Tourism

 

32,000 - estimated lost jobs in travel and tourism industries

$1.2 billion - estimated lost earnings in travel and tourism industries

(Details of job losses and lost earnings for the following industries are provided in the Federal Reserve analysis:

hotels, air transportation, restaurants, amusement and recreation)

Manufacturing

1,000 - estimated job losses in printing and publishing

$77 million - estimated lost earnings to apparel industry

$79 million - estimated lost earnings in printing and publishing

TAX REVENUE IMPACTS

$1.2 billion - estimated attack-related tax revenue losses for New York City in next two years

$9 billion - estimated tax revenue losses for New York State in 2001-2002 fiscal years, including attack-related losses

KEY STATEMENTS IN REPORT

"It remains critically important to repair infrastructure, improve security, and appropriately manage the city and state budget deficits in order to maintain the city and region's growth prospects."

"We expect the city and state to show a mild recovery in employment, most likely by mid-year."

"There are two key downside risks to a full recovery in New York City. Rising pressures on firms to decentralize operations in order to ensure business continuity have put a premium on quickly restoring the transportation, communications, and power infrastructure and on improving security against future attacks. And efforts to address the current budget deficits at both the city and state levels could entail policies that may lead to a long-term decline in the attractiveness of the city."

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