The effects of September 11th in commercial airlines, stock market, and charity funds

1. The effects of September 11th in commercial airlines, stock market, and charity funds Katie Pederson, Gowri Ramadas, and Danelle Lekan

2. Hypothesis The attacks of September 11th profoundly affected the American society. We believe the effects can be seen most clearly by changes in the stock market, the number of American commercial flights, and the amount of charity donations. We think that the months prior to September 11th, displayed a strong positive economy, a consistent rate in the number of American commercial flights, and a consistent rate in the amount of charitable donations. However, within the six months following the attacks, we estimate that the economy further decreased, charities suddenly increased then gradually lessened (but still remained above normal), and commercial flights initially dropped but then displayed upward trends (but not to previous levels).

3. September 11, 2001 Four commercial airliners were hijacked by terrorists and crashed into the WTC, the Pentagon, and PA The stock market closed for the first time in American history As a response, the American people donated millions to charity causes

4. Stock Market Prior to September 11th, the United States Economy was experiencing a recession. As a result the stock market underwent a slow decline. All of the United States stocks reflected similar declining trend-lines, therefore the NASDAQ stock exchange chosen for this project is representative of the rest of the United States stocks. For the analysis of the NASDAQ market, two different aspects that best reflected the economic trends were the Average Daily Dollar Volume, and Price Per Share Traded.

7. Analysis of Average Daily Dollar VolumeMarch 2001-August 2001 The Average Daily Dollar Volume is reflective of the average amount of money in the stock market per day each month. The decline of the stock market is a result of the recession due to tax cuts in the Bush administration. The high correlation, -.964, of the linear regression line reflects the close relation between the average daily dollar amount throughout the six months prior to September 11th.

9. Analysis of Scatter Plot Data The great drop in the Average Daily Dollar Volume in September can be attributed to the September 11th attacks, and the fears of an unstable economy. Therefore there were less investors, which led to less money in the Nasdaq market.

10. Conclusion of Average Daily Dollar Volume Stock Graphs Contrary to the original hypothesis, the stock market was declining prior to September 11th, because of the economic recession in the Bush administration. The September 11th attacks caused a devastating drop in the economy due to factors such as less consumer spending, the closing of the market, and more government spending in military safety. As hypothesized the stock market is slowly recovering, but as in the Average Daily Dollar Volume graph for September through March, the correlation is very poor. This is because of the highly differing distances below and above the correlation line.

13. Average Price Per Share Traded March 2001-August 2001 Like the piece-wise graph for the Average Daily Dollar Volume, this piece-wise graph reflects a decline in the Average Price of each stock prior to September 11th, which is contradictory to our original hypothesis. This can also be attributed to the economic recession which was a result of the Bush administration.

15. Analysis of Average Price Per Share Traded September 2001-March2001 Continued threats of terrorism may have also caused the erratic spread of data points. Using the equation for the linear line, Y=17.8486+.42964*x, the predicted outcome for the price per share in six more months yields, $23.43. This value exceeds the average price for the months prior to September, $22.72. However, predicted value is extrapolated out of the data set, and is not reliable due to the weak correlation value.

16. Average Price Per Share Traded Conclusions Contrary to our original hypothesis the average price per chare traded declined in the six months before September 11.th The average price per share is now slowly rebounding, however it is suffering some setbacks due to continued terrorist threats. The weak correlation of .5992, between the months of September 2001 and March 2002, make it difficult to predict the value for September 2002, due to risk of error.

17. Final Stock Market Conclusions All of the graphs for the months March 2001 thru August 2001, displayed relatively higher correlations (i.e. -.964, and -.829) compared to the very weak correlations between the months of September 2001 thru March 2002 (i.e. .2068, and .5992). This trend is a direct result of the September 11th attacks and the sense of unrest they left in the American people. However, it seems that if September 11th had not occurred, the economy might have continued in a downward trend. If this were true, it would be easy to predict the outcomes of the average daily dollar volume and price per share traded because of the strong correlations before September 11th.

18. Final Stock Market Conclusions Continued… • The weak correlations following the months of September 11th make it difficult to predict values for the stock market. But even though the values are not following a predictable pattern, they are slowing increasing (as seen by the positive correlation value). • So, even though stocks have not returned to their previous values, they are slowing increasing as the months progress, due to factors of increased patriotism and Bush’s address to the American people, which caused increased spending.

19. COMMERCIAL FLIGHTS

20. 9-11-2001 8:45 American Airlines Flight 11 hits the WTC 9:03 United Flight 175 strikes the S. Tower 9:45 American Airlines Flight 77 strikes the Pentagon 10:10 United Flight 93 crashes in Somerset County, PA First ever grounding of all US Flights

21. Quick Facts March 2002 Delta Report Total airline traffic is down 6.7% from 2001 Load Factor has increased 1.6% to 76.4% Boarded 8.6% less passengers then in first 3 months of 2001 Will add flights in summer 2002 to meet customer demand

23. Passenger Data Delta & Northwest already steadily decreasing March-June ’01 American & United experience minimal change March-August ‘01 Average 147,902 passenger drop from Aug. to Sept. ’01 All airlines (except Delta) continue a steady recovery Delta data proves erratic Sept.-Nov. ’01, actual recovery begins Nov. ‘01 Post-tragedy, all airlines approach original passenger rates of March ’01 Only Northwest exceeds pre 9/11 values with an increase of almost 30,000

24. Lodging Statistics

25. Lodge Data

26. Lodging Data Larger IQR of 25 in ’01, 15 in ’02 Economy adjusts to stable level ($80-100) Larger first quartile of $16 in ’02 Downsizing, economic failures Chicago becomes outlier in ’02 More connecting flights, layovers due to fuel levels Albany levels increase ($22) Transfers from main JFK and surrounding area Boston outlier significantly drops (-$33) 2 flights of 9/11 crashes en route from Boston

27. Analysis of Hypothesis Commercial flights per passenger were already in a recession (slow times of year, using other modes of transportation) America needs flight to survive economically Recovery is inevitable for all four companies, already on their way to stabilization

28. Sources of Error? Devastating effect on businesses causes closure, downsizing No shows, early leaving, security delays at airports Public opinion, G.W. Bush’s address to the nation New methods of promotion Holiday season flights Tourist season for Orlando data Inflation

30. Charity Donations After September 11th, people wanted to help the victims in any way possible Many branches across America- accessible 930.3 millions of dollars were raised through American Red Cross as a result of 9/11 Contribute money, workers, meals, and other services to the victims

32. The first graph shows the money raised from 1993-2001 without the Liberty Fund included; 2001 is still higher than recent years in the past The second graph includes the Liberty Fund in 2001 and the increase of donations – this shows the magnitude of the response after 9/11 and the years prior to 2001 are not even comparable to last year

36. January of 2002 had the highest number of disaster workers at various sites The greatest decrease between January and February as more debris was removed Since February- slight decrease The month of October had high rate of change in number of workers

39. ANALYSIS OF HYPOTHESIS The economy before 9/11 was already in recession, so the amount of donations was lower than in previous years The number of workers/ meals/ health contacts is still above normal levels, even though it has decreased since January

40. SOURCES OF ERROR The donations at Christmas time could be a factor where the numbers are exaggerated, decreasing the actual amount of money donated to Liberty Fund Unexpected recession prior 9/11 Large donations of rich people rather than the majority can create faulty impressions of the amount the American people donate

41. OVERALL September was a horrific instance in American history that highly effected the economy in stocks, charities, and flight America is strong with a sound structure and is capable of large-scale reconstruction Prior to 9/11, the economy was already in a steady recession, which was evident through our data. However, after 9/11, a slow recovery is obvious. We will overcome and grow stronger as a nation as a result of 9/11

42. Works Cited “9-11-2001.” Online. Internet. Available http://www.9-11- 2001.org/index.html. May 2002 download. “American Red Cross Response to September 11 Tragedies as of April 26, 2002.” Available http://www.cincinnatiredcross.org, May 2001 Download. “American Red Cross Response to the September 11 Tragedies, as of October 18, 2001.” Available http://www.cincinnatiredcross.org. May 2002 Download. “American Red Cross Response to the September 11 Tragedies, As of January 11, 2002.” Available http://www.cincinnatiredcross.org/RedCross/RedCross MainDB.nsf/Alldocs/4BB888E4A3EB. May 2002 Download. “American Red Cross Response to the September 11 Tragedies, as of February 28, 2002.” Available http://www.cincinnatiredcross.org. May 2002 Download.

43. Works Cited (cont.) Bowers, Stephen R. “A Day Without End: The Impact of the September 11th Terrorist Attacks” Online. Internet. Available http://www.jmu.edu/orgs/wrni/Terrorism- Sept11.htm#economic, 25 April 2002 download. Delta March Traffic Down 6.7%.” Online Internet. Available http://orlando.bizjournals.com/orlando/stories/2002/04/01/daily33.html. May 2002 dowload. “Disaster Relief Fund Balances.” Available http://www.redcross.org/disasterrelief/financial.html, May 2001 Download. Edleson, Michael. “Monthly Market Data.” Online. Internet. Available http://www.marketdata.nasdaq.com/mr_module_menu.asp, 25 April 2002 download.

44. Works Cited (cont.) Greater Orlando Aviation Authority. “Monthly Passenger Statistics- Orlando International Airport.” Online. Internet. Available http://www.orlandoairports.net/goaa/reports/paxscyol.xls. May 2002 download. “Lodging Rate Comparison.” Online. Internet. Available http://policyworks.gov/org/main/mt/homepage/mtt/perdiem/travel.shtml. May 2002 download. “Pictures.” Online. Internet. Available http://www.corbis.com. May 2002 dowload. Squires, Jerry, M.D., Ph.D. “Red Cross Testifies Before HHS Advisory Committee” Online. Internet. Available http://www.redcross.org/press/biomed/bm_pr/020131squires.html, April 2002 download. Bogdanowicz, Tom. “Fears of Further Economic Slowdown.” Online. Internet. Available http://www.cnn.com/2001/WORLD/europe/09/21/gen.europe.economy/index.html. May 2002 download.