DEP Press Advisory on Deer Hunting Cancellation, October 2, 2001

NYC 9/11 Public Portal Document

Only Certainty There are many imponderables that are making economists’ crystal balls even cloudier than usual. One, of course, is the put together a detailed description of the state of the city’s economy before amount of federal aid and the speed at the attack, the short-term effects and To Economists which it will arrive. So far, only $126 million in aid has trickled in to the city, according to the office of State Comptroller H. Carl the long-term outlook. The effort is being organized by the New York City Partnership, a business group, McCall. because “after the loss of lives, the Is Dire Outlook While the federal government has re­ leased $5 billion of the promised $40 billion loss of livelihoods is the next most urgent issue to address,” said Kath­ in special spending, half of that is going to ryn S. Wylde, the group’s president. the Department of Defense and to repair the The city's economy, so strong for Predicting a Rebound Pentagon, the comptroller’s office said. The Federal Emergency Management Agency so long, had already begun slipping before the trade center disaster. But a Hard End to 2001 is to receive $2 billion, but some of that money will go to Pennsylvania, where a But the collapse of the towers top­ pled three of the city’s most impor­ hijacked plane crashed, and Virginia, for ter engines of economic growth: By LESLIE EATON the Pentagon. President Bush, during his finance, tourism and entertainment, visit to the city yesterday, announced that and retailing. As President Bush met with corporate he would seek $75 billion from Congress, but The loss of life has been, of course, executives yesterday to discuss the national that would go toward stimulating the nation­ the worst thing. Some small but im­ economy. New York politicians, economists al economy. portant Wall Street firms like Keefe and business leaders began to grapple with The Small Business Administration said an economic outlook that ranges from awful yesterday that it had approved 117 loans Bruyette and Cantor Fitzgerald were to appalling. worth a total of $11.9 million in the wake of devastated in the attack. The number of jobs in the city has proba­ the disaster. That is a tiny fraction of the 759 Several very large firms, like Mer­ bly plunged by 28,000, and is likely to drop by rill Lynch and Lehman Brothers, had at least 40,000 more this year — maybe by loan applications it has received, and to move their operations to other 87,000 if the national economy stumbles into an even smaller fraction of 7,881 parts of New York and to New Jer­ a severe recession. The unemployment rate, applications that businesses have re­ sey. Others, like Goldman Sachs, already edging up to 5 percent, could end the quested but have not sent back to the were simply shut out of their offices agency. year as high as 6.7 percent, and might hit 8 for almost a week. percent by the end of next year. And the Looming even larger are questions The Securities Industry .dissocia­ city’s economy, which before the attack on about war and about terrorism “Will tion, the trade group for financial the World Trade Center on Sept. 11 ap­ there be a more permanent impact, firms, estimates that 45,000 employ­ peared likely to grow slightly ilTthe^ just- or will people just hole up in their ees of its members and their suppli­ ended third quarter of the year, instead homes, with thelr horne theaters?” ers had to leave-Lower Manhattan; shrank sharply. asked Robert Kurtter, a senior vice about 25,000 of those found space All of these statistics come from forecasts president at Moody’s Investors Serv­ elsewhere in the city. produced by Economy.com, which special­ ice, which analyzes the city’s econ­ The good news is that the Federal izes in regional financial data. While many omy for investors. “I don't think any Reserve’s move to slash interest economists have been reluctant to assign of us have built in an assumption of rates helped keep firms’ losses rela­ such specific figures to the future, they tend perpetual terror attacks or war. but tively small, said Frank Fernandez, to agree with the thrust of the analysis, it’s clearly a risk.” chief economist of the Securities In­ which foresees a very hard end to 2001. Another question for economists is dustry Association. The bad news is “There's going to be a very painful con­ what will happen to the national that those operating losses do not traction,” said Rae D, Rosen, a senior econ­ economy, which had been skidding include the billions of dollars firms omist with the Federal Reserve Bank of into recession before Sept. 11. That have spent and will spend to replace New York. Like many analysts, she predicts prompted Mark M. Zandi, the chief the property that was damaged and that things will improve early next year, but economist at Economy.com, to de­ for relocation, he said. “a lot depends on how quickly people are in velop three forecasts of the after­ Many of the 14,000 businesses in any position to rebuild." math, which are progressively more Lower Manhattan that were affected Even if that rebuilding begins relatively negative depending on the national by the disaster were small shops soon, not everyone thinks the rebound will situation. selling jewelry or cigars or offering be sharp. For example, his predictions for shoe repairs. Others were restau­ One is Stephen Kagann, the chief econo­ the city’s unemployment rate at the rants that cater to the Wall Street mist for Gov. George E. Pataki, who said end of 2002 range from 6.4 percent to crowd. While business seems to be yesterday that many areas that had experi­ 8 percent. If the twin towers had not coming back near the tip of the is­ enced disasters like hurricanes and earth­ i collapsed, that rate would have prob- land, many shops near the trade cen­ quakes had seen their economies bounce ter remain closed, and the city’s con­ back quickly when federal aid and insur­ sumers are keeping their credit ance money kicked in. The large number of cards in their wallets. But in those places, he said, most of the damage occurred in residential areas. where homes could be repaired with rela­ imponderables make tively small sums of money. "When people’s houses are wrecked or crystal balls cloudier damaged, they can move very quickly — I call it the Home Depot effect,” Mr. Kagann than usual. said. Spending to rebuild Lower Manhat­ tan’s business district, he said, is likely to happen at a slower pace. ably been about 5.2 percent, he said. In New York City, a group of econ­ omists and consultants is racing to lO'H-OI

NYC-WTC_OOO1 52487