Following Sept. 11, many Americans associated the roller coaster stock prices and increased unemployment rates with the attack.
But more than two years later, the country at national, state and local levels still is feeling the aftershocks of an economic downturn, which started many months before the day that changed the world forever.
Economic indicators are showing positive marks for the nation as a whole. Jobless rates are declining, the Dow Jones Industrial Average is stabilizing and consumer spending is on the rise.
But the ripple effect isn't over yet. Many states still suffer from recessions, unemployment rates are on the rise and higher education funding is in jeopardy nationwide.
In the safe enclave of Athens, the harsh realities of a waning economy are somewhat subdued. Government and Ohio University jobs help deter high unemployment rates and salary reductions.
But the rolling hills of Southeast Ohio can only shield Athens for so long, before state and national deficits begin to take their toll.
A nation changed
On Sept. 11, 2001 the world was rocked. Skylines were altered, leaders were tested and the poor economic indicators of the previous eight months quickly were forgotten.
The direct effect of Sept. 11 on the economy is exaggerated somewhat, said Richard Vedder, distinguished professor of economics at OU. By January 2001, nine months before the terrorist attacks, the national unemployment rate was 5 percent, up 1 percent from the previous year.
Ohio rates also increased, but Athens remains below state and national averages at 4.3 percent, a rate that has only increased 0.6 percent since 2001.
But Americans like to measure the change in the economy from that date, he said.
On Sept. 11 the Dow Jones Industrial Average dropped 7.12 percent, the single greatest drop because of a major national security event in history, according to the Dow Jones Web site (http://www.djindexes.com). The drop is greater than those following Pearl Harbor, Kennedy's assassination and the Oklahoma City bombing combined.
While the actual physical damage of Sept. 11 was only about 4 percent of all U.S. wealth, the chain of military and anti-terrorism spending the attack put in motion would eventually lead the United States to a nearly $450 million deficit in 2003 from a budget surplus in 2000, Vedder said. Spending is up 23 percent this year alone.
But if the increased spending is curbed, the national economic climate should be on a turn around, Vedder said.
In a Sept. 14 Newsday column, Vedder advises President George W. Bush not to panic
market forces are working in his favor.
A state of crisis
The failing economy after Sept. 11 did not shake the national economy as much as many predicted, but the economic aftershocks are rocking state governments to this day.
State finances often lag behind national problems - Ohio is no exception, said George Zeller, a senior researcher for the Council of Economic Opportunities in Greater Cleveland, a private non-profit organization that serves low income people.
Zeller, who analyzes the state economy, said two years after the Sept. 11 attack the state still is at recession levels, and new claims for unemployment in Ohio are up 58 percent. The job loss rate also is 2 percent higher than national levels.
The culprit? Ohio's reliance on manufacturing jobs.
Athens County is not an exception, losing more than 300 manufacturing jobs when the TS Trim plant closed this year
In a poor economy manufacturing jobs are the first and hardest hit sector of the workforce, and because Ohio is losing so many jobs, the state revenue from income taxes is plummeting, Zeller said.
The state of Ohio lost about $4 million a year from payroll earnings for the last two years, he said. Some publicly funded agencies have handled the loss in revenue better than others.
For example, the Greater Cleveland Regional Transit Authority prepared for the loss in revenue and weathered the storm without raising fares, Zeller said. The state of Ohio is another story.
The state government, expecting increasing revenue, over-budgeted several years in a row, Zeller said. As a result, the state has cut funding from numerous programs, including the welfare system.
But the cuts in welfare should not affect recipients in Athens County, said Tracy Galway, spokeswoman for Athens County Job and Family Services.
Because of an elaborate system of exemptions for residents in the cash assistance program - Athens families with minor children in the household with parents working or pursuing education at least 30 hours a week - funding should be available for those who need it.
A looming local front
On Sept. 11 New Yorkers fled from the towers, Washingtonians poured out of The Pentagon and Athenians watched it all on television.
Much like its remoteness saved Athens from the violence of the attack, the university jobs and economy saved the city from the economic aftershocks.
In Athens, when OU is financially stable, both the city and the county are financially stable too, Vedder said.
The university is the county's number one employer, said Athens Mayor Ric Abel. Meaning when the university is strapped for cash, the city and county tend to feel a pinch.
But so far this year, both the county and city income tax revenues are up. The city's revenue has risen 4 percent since last year, and the county's revenue is up 2 percent - numbers that could soon change.
The income tax was padded this year because 132 OU administrators and staff took early retirement to receive a taxable $10,000 bonus, said Gary Van Meter, Athens city auditor.
But the loss of 315 jobs from local TS Trim Honda parts manufacturer and almost 200 university staff salaries lost this year through retirements and attrition, next year's revenue could be down substantially, Vedder said.
City officials have not yet decided how to handle the potential for falling revenue next year, because exactly how much funding they'll lose is still unknown, Abel said.
But the extent of OU's financial problems is probably exaggerated, Vedder said.
I think this poverty mantra is a bit overdone he said.
Although the state of Ohio cut more than $12.6 million from OU's funding during the past year, much of that money has been made up with a 9.9 percent tuition and fee increase.
A threat of increasing tuition rates is a slow down in student enrollment, Vedder said. Fewer students mean less money.
Total enrollment for the Athens campus dropped by fifty students Fall Quarter 2003 from last year. But it is still up 224 students from the 19,524 enrolled Fall Quarter 2001, according to preliminary statistics on the Institutional Research Web site. (http://www.ohiou.edu/instres/)
While some students may curb their spending in local restaurants and bars because of increased tuition, the lack of revenue from students is evened out by what the university is able to do with increased funds, Vedder said.
OU's financial problems pale in comparison to other institutions throughout the country, he said. For example, the University of Virginia increased its tuition almost 30 percent this year alone.
Also, university spending is up about 9 percent and OU faculty and staff received 2 percent pay raises, keeping up with the 2 percent increase in inflation.
In situations of extreme austerity you don't give anyone a pay raise.
Low paying jobs, low unemployment rates and the high student population aid Athens city in getting grants for local projects, and unless state and national funds completely dry up, Athens shouldn't have a problem receiving its normal funding, Abel said.
From a government standpoint we haven't been hit very hard yet.
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Lauren McDowell
