At the seven-week point, New York City is clearly in the recovery phase and officials are mounting an effort to obtain federal aid to cover the economic fallout from the terrorist attacks.  According to a CNN report, Mayor Rudolph Giuliani was predicting a $1 billion revenue loss for this budget year, and Governor Pataki was calling for$54 billion to revitalize the city.  As a cost control measure, Giuliani has already ordered a 15% cut in spending by most city departments, sparing only the police and firedepartments and the school system.  Those departments face a 2.5% cutback.  A city wide hiring freeze had gone into effect after the attacks. [1] 

   Lucrative sources of revenue and important employers, the hospitality and tourism industries have been two of the hardest hit.  “Everything has gone wrong for them simultaneously,” said Mark Lomanno, president of Smith Travel Research in Hendersonville TN, which released statistics.  “Things were already slow as business travel was turning downward and then they get hit with September 11th.  Business has rebounded from what we saw after the 11th, as hotels emptied out, but the rebound has slowed down now.  The industry was hoping that every week was going to be better than the week before, but now we’re starting to see it slow.” 

  In cities such as New York, where occupancy rates at hotel dropped to 20-30 percent—and in some cases into the single digits—immediately after the attacks, some previously booked group business has started to return. [2]  Near the end of October, hotel occupancy had risen to about 87% of capacity, compared to 84% last year at this time, according to Cristyne Nicholas, the city’s tourism chief.  Losses in room revenues in the weeks following the attacks were estimated at between $6 million and $10 million a day. [3] A third of the nation’s 265,000 unionized hotel and restaurant workers have been laid off.  [4] 

   Bills have been introduced in Congress that would provide tax credits for any travel-related purchases, such as airline tickets or hotel rooms, through the end of the year.  Other measures would include making business meals and entertainment fully tax deductible, instead of the current 50% deductible, and making travel by spouses deductible for business trips. [5] 

   Even the Jakob K. Javits Convention Center in New York, which served as a massive emergency relief center, is back on track.  The sprawling, 814,000 square-foot complex is back to hosting trade shows—a sign of recovery for an industry that suffered a big blow.  Dozens of trade shows scheduled for the peak season of September and October were cancelled or postponed.  Since mid-October, most scheduled events are on-track, but attendance is expected to be off by 10% overall due to travel restrictions and safety concerns. [6] 

    Cab drivers say fewer tourists, restricted roadways, and even ethnic bias has caused their incomes to tumble since the World Trade Center attacks.  “Drivers have been impacted at a disastrous level,” according to a spokesperson for the New York City Taxi Alliance, which represents more than 3000 taxi drivers.  The Alliance estimates the drivers’ income has been cut by at least 50% since the attacks. [1] 

   The famed New York theatre industry has taken a hit and is attempting its own revitalization.  While the numbers of theatergoers have increased since September 11th, they are still down by more than 10% from a year ago, according to a recent survey by the League of American Theatres and Producers.  Theatergoers from overseas are even more rare, declining 64% from the same time last year.  New Yorkers have become the lifeline for many of the shows:  theatergoers from the tri-state area comprise 80% of the audiences.  “Advance sales are down, but we are getting much more same-day and same-week ticket sales,” according to a League spokesperson.  [6] 

   New York’s business infrastructure has suffered some major hits, too.  The destruction of the World Trade Center removed about 12 million square feet of equipped Class A office space:  that’s the equivalent of all the office space in Atlanta or Miami.  An additional 18 million square feet of office space in downtown Manhattan was damaged.  There’s also ruined infrastructure in the lower Manhattan area:  a crushed subway station, five phone-switching stations, two electrical substations, and 33 miles of cable.  Alan Hevesi, New York City’s Comptroller, estimated New York’s total property loss at $34 billion—nearly twice the damage from Hurricane Andrew, previously the worst disaster in American history.  Hevesi predicted that it would cost an additional $14 billion just to clean up and police the site.  [4] 

   New York also sustained “business interruption” costs estimated at $21 billion for the downtown neighborhoods that were inaccessible for weeks after the attacks.  This includes cost impacts on businesses such as restaurants, parking lots, convenience stores, as well as boutiques and related merchants.  The  elf-employed are taking economic hits.  A wedding invitation artist based in Tribeca who usually got a few business inquiries and closed one sale per week before September 11th, now reports that not one couple has inquired since that fateful day.  [4]   Part-time and recently hired employees are taking hits, too.  Many are being denied unemployment benefits due to  echnicalities in outdated New York State unemployment system.  [7]  On a positive note, the Mayor’s Office has organized two additional Job Fairs.  More than 6000 individuals attended the first fair, and of those, 56% were seeking jobs as a result of the World Trade Center attack. [8] 

   Another interrupted New York City industry is broadcasting.  Homes without cable or satellite dish service—hundreds of thousands of homes in the New York area—remain unable to receive more than 2 television stations.  This is due to the loss of the primary transmitting antennae that were located on the top of the north World Trade Center tower.  The local broadcasting industry has sustained economic losses in the tens of millions of dollars.  “According to the BIA Financial Network, a firm that follows advertising spending on local television stations, advertising revenue for the New York market will fall by about 16 percent for this year, twice the drop the firm was predicting prior to September 11th. “ 

   The stations that are able to transmit are able to do so because they had backup antennas on the Empire State Building.  Some additional antennas have since been
placed there, but with size restrictions due to space and power limitations.  It is anticipated that a new 2000-foot tower will have to be constructed to replace the
capability lost with the World Trade Center tower collapse.  “The collapse of the towers cost the stations more than their antennas.  All the stations had also installed technical equipment for the coming switch to digital television signals.  All of that was wiped out.”  WNET, the public broadcasting station, had started digital service in July and estimated that the price for its lost equipment alone was well over $20 million. [9] 

   An advertising business sector significantly affected by the attack is the commercial production industry.  “Production on all commercials in New York City was halted immediately.  Shoots did not resume in the boroughs outside Manhattan until September 14th, and in Manhattan, they resumed on September 25th, but only north of Canal Street.”  Many productions had to be postponed or moved.  “The timing could not have been worse for an industry that had already been dealing with the effects of the softening economy, which led to reductions in commercial production schedules, and a six-month strike by the Screen Actors Guild.”  With the resumption of production, 38 permits have been issued for commercial shoots, according to the Mayor’s office for film, theater, and broadcasting.  About 30 to 35 percent of commercials shot in the US are produced in New York, compared with 50 to 60 percent in Los Angeles.  Some companies are now considering producing in New York commercials that otherwise would have been produced elsewhere simply to show support for the city’s recovery efforts. [10] 

   In early October, New York City launched a $40 million advertising campaign to encourage tourists and business travelers to visit in the wake of the terrorist attacks.  The cost would be equally shared between New York State and the Port Authorities of New York and New Jersey.  Already receiving plenty of prime-time airing, particularly with the New York Yankees in the playoffs and now the World Series, the campaign revolves around the famous “I Love New York” slogan and features well-known New Yorkers from entertainment, news, sports, and government.  During the campaign launch press conference, Governor Pataki said, “This unprecedented campaign not only sends a message to America and the world that New York is open for business, but makes a strong statement that we will never surrender our freedoms or back down from a challenge.” [11] 

References: 

[1]  “Recovery:  NY Seeks Billions In Federal Aid”, CNN.com, October 10, 2001 
[2]  Hedgpeth, Dana, “Big City Hotels Suffer a Relapse,” Washington Post, October 26, 2001 
[3]  Kuchwara, Michael, “Locals Fill Broadway Seats,” Associated Press, October 26, 2001 
[4] Grunwald, Michael, “Terror’s Damage:  Calculating the Devastation,” Washington Post, October 28, 2001 
[5]  Hedpeth, Dana, “DC Tourism Fears a New Blow,” Washington Post, October 18, 2001 
[6]  Wong, May, “Trade Shows on Way to Recovery, Associated Press, October 19, 2001 
[7]  Leonhardt, David, “Out of Work, and Out of the Benefits Loop; Restrictions Will Keep Millions From Receiving Help,”  The New York Times, October 17, 2001 
[8]  “Mayor Giuliani Announces Additional Twin Towers Job Expos,” NYC Mayors Office Press Release #330-01, 23 October 2001 
[9]  Carter, Bill, “TV Stations Scrambling for Antennas, Ratings, and Revenue,” The New York Times, October 29 2001 
[10]  Fass, Allison, “Filming of Commercials in New York is Making a Comeback after the Disruption of September 11th,”  The New York Times, October 11, 2001 
[11]  “NYC launches $40 Million Tourism Push”, CNN.com, October 2, 2001 
 

   Even as stock market indices continue to rise above pre-September 11th levels, indicators are emerging which point to much deeper wounds in the national and global economies.  With the Fed announcing on October 24th that every region of the country has had financial setbacks, and the third-quarter earnings from the S&P 500 companies coming back sour (predictions lie as much as 25 percent down from last year), one has to speculate on how much longer strong market investment can mask the underlying problems we face. 

   The numbers of newly unemployed that have surfaced since the attacks give a clear picture of how US spending patterns have been altered by the confidence-shaking events.  The hardest hit industries are those that relate to tourism, followed by technology and manufacturing.  The Washington Post website, www.washingtonpost.com, reports layoff statistics updated daily.  These statistics are listed by industry, and as of October 28 they were as follows: 

Airline - 118,240 
Defense/Aerospace - 39,650 
Financial  - 10,900 
Hospitality  - 12,100 
Manufacturing  - 44,903 
Media  - 675 
Retail - 6,925 
Technology - 72,021 
Tourism - 2,844 

   On a daily basis, news of further cuts deflate hopes that consumer confidence may be returning.  For instance, Sears and Eastman Kodak said they will cut a total of about 9,000 jobs, and airline employee unions are warning that changes in food service on airline flights could lead to an additional 45,000 airline catering jobs being lost.  United Airlines, the second largest carrier in the United States, and the owner of two of the planes that were hijacked in the September 11 attacks, is looking at the possibility of bankruptcy if a drastic increase in profits is not felt by mid-2002.  Despite the federal bailout plan of $15 billion, United’s stocks have plunged over 21 percent to 1988 levels.  United is expected to report a quarterly loss of close to $1 billion or more when it releases third-quarter results on November 1st.  They are also limiting their number of daily flights to 1,654, down approximately 30 percent from September 11th.  They are still better off than Swissair, whose pre-attack troubles made it too vulnerable to avoid going under during post-attack, ultra-low travel levels.  British Airways is reporting a 30 percent drop in trans-Atlantic sales. 

   Marriott Hotels and Carlson Travel Company both reported up to 40 percent decline in sales the month following the attacks, including the past three weeks.  In a congressional subcommittee meeting on October 23rd, J.W. "Bill" Marriott Jr. reported that net reservations at his 2,000 hotel properties dropped 94 percent after Sept. 11 and were already down about 10 percent before that.  As result, weekend room-rates have dropped by up to 40 percent, employees have been laid off, and hours have been reduced for many who remain employed.  Marriott told the subcommittee that “Usually you make all of your money in September, October and November, and that gets you through the winter months.  Now we’re not making any money in September, October or November”  Washingtonpost.com) 

   This blow to the tourism sector has hit extra hard in Washington, DC, where the city’s Reagan National Airport was closed for 24 days following the attacks.  Following the re-opening of the airport, wide reports of Anthrax exposure and infection which have gotten constant media coverage have given the city an 'unsafe' reputation to travelers.  Hotel owners, tourism officials and convention centers have been preparing for a large number of cancellations as additional reports have continued to surface.  So far, hotel occupancy rates are down 30 to 40 percent from expected levels. 
It is not only the United States, however, that is feeling these economic body-blows.  The UN labor agency has estimated that about 9 million people of the 207 million
worldwide in tourism related jobs could become unemployed.  Countries like Canada, Mexico and Britain, who depend on dollars from US travelers, are cutting back drastically. The Washington DC hospitality industry reported losses of approximately $10 million/day in September, and approximately $5 million/day in October.  These losses include virtually all parts of the sector, including restaurants, shuttle buses, and taxis. A meeting planner for the National Education Associate, Toshi Okochi, was quoted in the Washington Post as saying, “Washington, D.C., is more of a target than if you're in Peoria, Illinois, and people recognize that when they come here.  Now with anthrax, it's become just another piece to add [to its image of being a target].”  In the short term, the city’s reputation has been so sullied that convention planners are calling local tour agencies to ask if the city is going to be safe for conventions two and three years in the future. 
In manufacturing and technology, the pains are being felt as well.  The Fed reported that large layoffs in manufacturing hit seven of its districts hardest - Boston, Dallas, Kansas, City, Chicago, Philadelphia, San Francisco and St. Louis.  Motorola, who had already let go 32,000 employees earlier this year, had to add an additional 7,000 to the list, and Nortel has had to release 20,000 in addition to 30,000 earlier this year.  In post-attack statistics, however, it is Boeing who has made the greatest cuts at 30,000.  The US Postal Service has been hit especially hard since the onset of the anthrax attacks, which have severely hurt consumer confidence in the safety of the mail.  By volume, mail had dropped by 5 percent in September compared to 2000, giving revenue of $500 million lower than expected.  A post office destroyed near the World
Trade Center complex adds an additional $63 million to the figure.  Tightened security has sapped funds that the Service cannot spare, and Gene Del Polito, president of the Association for Postal Commerce, was quoted in the Washington Post as saying the situation is going to get worse.  A possible easing of these woes could be seen in the form of a first-class stamp rate-hike to 37 cents.  Not all industries were hard hit, as some handle  roducts that are consumed with consistency in even the worst of recessions, and others are providing situation specific goods and services.  Grocery stores have seen little damage to their earnings levels, and companies such as Smithfield Foods, Inc., are having record levels of sales for this time of the year.  Several stores are increasing their work-staff, amidst the widespread layoffs throughout the other industry sectors.  The biotechnology sector is
witnessing similar trends.  One company, Tetracore, Inc., which produces do-it-yourself instant anthrax tests, cannot fill orders fast enough.  Few, if any, of the job-cuts have hit either of these markets.  The government is taking measures to counteract the slide that had begun well before September 11.  In an attempt to jump-start the economy, the House has passes tax relief legislation (with a 2 vote margin), which would provide $100 billion.  This money would primarily assist the larger companies, though the impact is expected to eventually spread.  In addition, the Fed is meeting in November, and many economists predict a tenth interest rate cut, bringing the rate below 2.5 percent.  It has proven to be incredibly difficult to predict what the true economic cost of these attacks has been.  While there is an undisputable loss in the travel industries, there will be large growth in many others, such as security and bio-tech.  It is also incredibly difficult to judge what problems are due to the attacks, and what companies would have faced anyways.  While J.P. Morgan chief economist Bruce Kasman was quoted on The Wire as saying “this recession is likely to be steeper and longer than people had expected, Treasury secretary Paul O’Neill was saying that the economy is beginning to see a recovery.  The simple fact is, there exists no historical basis upon which to squarely predict the future, so only time will tell who made the best guess.