The Impact of September 11 on Defense Industry Stocks

p The Impact of September 11 on Defense Industry Stocks

CONTENT

The impact of the World Trade Center tragedy of September 11 on the economy of the USA -

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What happened to the defense industry stocks ? -

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Boeing 's defense division -

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Lockheed Martin - the world 's largest weapons contractor -

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The impact of the World Trade Center tragedy of September 11 on the economy of the USA

The September 11 attacks in New York and Washington have already cost America thousands of lives and

billions of dollars in damages . But those are only the direct costs . September 11th economists from the National Bureau for Economic Research announced that as of March , 2001 , the economy was in recession . This was the earliest that they had called a recession since they began this service but the thinking was clear How could they go wrong ? All measures of economic activity indicated that the third quarter of 2001 was going to produce negative real GDP numbers prior to September 11th , so the attacks would likely deepen the downturn . Further , they predicted the downturn would last into at least the fourth quarter . Indeed when the third quarter numbers were released real GDP had contracted

The reasons for the contraction were many . The single biggest culprit was business , which had evidenced the rapid declines in investment and inventories that had accounted for almost the entire decline . Another precipitating event was the confused Presidential election outcome of 2000 . The rapid slowing of the economy corresponded generally to the time when America spent a month wondering who its next President would be . On the other hand , because of seven interest rate cuts by the Federal Reserve in 2001 , consumers kept on spending . The low interest rates kept mortgage and auto loan rates attractive

Clearly the attacks of September 11th qualified as shocks ' under any definition . Retail sales during the week of September 11th were dramatically lower than they otherwise would have been . This , and a variety of other indices of consumer confidence all took very serious hits in the fall of 2001 . Complicating things further , business confidence , which is typically measured by looking at businesses hiring , layoff , and investment plans , was also adversely affected by the aftermath of the attacks . These effects in combination created the clearest example of an aggregate-demand shock in decades

In response to the attacks , dramatic price reductions were the of the day . The most notable of these was the reaction of the automobile industry . Within days of the attacks the executives of the major U .S auto manufactures were meeting in Washington with the President and with the Chairman of the Federal Reserve , Alan Greenspan , to plot how to get through this rocky period . The result of those meetings was lower interest rates generally and dramatically more favorable automobile financing arrangements . Several manufacturers introduced 0 financing deals . Because these 0 car loans were for short loan periods and required exemplary credit , fewer than one-third of the cars...