The effect of terrorism on the global economy Essay

The effect of terrorism on the global economy - Essay Example and all of the countries it trades with. The federal government, in what some might term a ‘knee-jerk’ reaction to the attack, spent unprecedented amounts of money on questionable programs and ventures in an effort to ‘provide security’ to its citizens. â€Å"The President has requested a significant increase in security-related programs in the context of the budget for 2003. Additional spending of $48 billion was proposed for national defense (an increase of 14 percent from the previous year). In addition, the President asked Congress for an appropriation of $38 billion for homeland security, compared to $20 billion spent in 2001† (Looney, 2002). The combination of a stunned economy, a flat-line growth in the job market and dwindling government resources made its affects known worldwide. This paper will examine how the events of 9/11 influenced many aspects of the U.S. economy and examples of its global consequences. The U.S. was enjoying a period of vigorous economic expansion during the second Clinton administration, a period that saw the nation’s first budget surpluses in 40 years. This growth was fueled largely because of a general confidence in the nation’s economic health and an increase in worker’s productivity. This time of prosperity was over by the latter part of the year 2000 as the trend in business appeared to reflect a lessening confidence in the direction of the national economy. Corporations, especially those in the technical industries, began systematically downsizing, outsourcing and employing other means of economizing because of steady revenue losses. The economy had shown signs of weakening the entire year of 1999, and by the end of 2000, the manufacturing segment was also steadily shrinking as was evidenced by the lack of equipment orders, profits and number of employees. This trend was experienced many other industries