Changes in consumer behavior after the September 11 attacks on the World Trade Center
"Sales Drop and Spending Crawls as Uncertainty Grips Economy," New York Times, September 30, 2001
The September 11, 2001 airline attacks caused a profound change in general consumer behavior in the U.S. Understandably, an immediate and obvious change was the extreme reluctance and aversion of general public to flying and tourism. As a consequence airlines and hotels, theme parks, rental cars and airport restaurants suffered significantly. Yet these industries represent only about 4% of the $10 trillion U.S. economy. If economic harm was limited to these industries, it could be managed without a significant ripple effect to the economy as a whole.
However, the psychological effect of the attack spread a gloom to many industries other than those directly affected. Consumers were uncertain about not only their personal safety but the outlook of the economy, especially in the event of military hostilities in the Middle East. Therefore, they became very cautious spenders and were reluctant to purchase durable consumer goods such as homes, cars, appliances and computers.
Consumers avoided the purchase of rather luxury, non-essential goods at upscale department stores such as Gucci and Saks. Instead, they flocked to Wal-Mart, Kmart, and other discount stores to purchase essential goods such as packaged food, toothpaste and toilet paper. Even at supermarket, sales of facial cosmetics and nail polish declined sharply, whereas demand for candles increased significantly.
Many restaurants in city centers away from airports experienced a significant decline in customers, whereas business at take-out windows of fast-food chains increased substantially, indicating customers' reluctance to linger inside crowded restaurants.
Attendance at movie theaters declined noticeably, whereas demand for video rentals increased sharply. In fact, Disney and Warner Brothers decided to delay the opening of two expensive films, because the movies dealt with airline terrorism, and the companies feared that the movies may further alienate reluctant movie goers.
Consumers' gloom following the terrorist attacks was clearly reflected in a poll of 1,000 people. 70% of them indicated that they were depressed, 50% could not concentrate on their work, and 33% had difficulty of sleeping. As a consequence, demands for sleeping pills and antidepressants soared.
Despite mortgage rates of 7%, the lowest in thirty years, home sales declined abruptly by 6% following September 11th, reflecting homebuyers' anxiety for the future prospects of the economy.
Geographically, large cities, especially tourist Mecca's such as Las Vegas, New York and Atlanta, suffered enormously, while small resort areas accessible mainly by private cars seemed to be less adversely affected.