Slowly but inevitably, life is returning to some sense of normalcy in the wake of the Sept. 11 terrorist attacks. That's the good news. As a nation, we had been temporarily consumed by fear following the deadly assaults on the World Trade Center and the Pentagon. But as New York Mayor Rudy Giuliani said, “This is the land of the free and the home of the brave.” We need to grieve for the loss of more than 5,000 souls, but we also must move on with our lives, the heroic mayor insists. Heeding that advice, Americans are again taking to the skies. We're shopping and returning to our daily routines, even if it means doing so under heightened security. And our professional sports teams, back from an unscheduled hiatus, offer a much-needed diversion from man's inhumanity against man.
The economic consequences
But the bad news is that economies in several of the Top 10 markets profiled in this issue have taken a direct hit from the attacks. As we were going to press this month, Mayor Giuliani signed an executive order freezing $1 billion in municipal spending in the Big Apple. Specifically, the order imposes an immediate hiring freeze and calls for a 15% cut within every New York City agency. Why? The mayor's staff said the tragedy has resulted in the loss of $1 billion in revenue for the city.
Auto sales, used as a barometer to measure the health of our economy, have slipped. Sales of cars and trucks in the U.S. dropped 25% to 30% in the first 10 days following the attacks, according to the“Big 3” auto makers Ford, DaimlerChrysler and General Motors.
Hotel occupancies dropped to between 30% and 40% in many big-city markets as business travel halted in the days following the attacks. The gravity of the economic impact of the terrorist attacks was addressed in a special edition of “Quarterly Perspectives,” a widely respected publication prepared by Lodging Econometrics, a Portsmouth, N.H.-based research firm. “A crisis condition now exists in travel so serious that, for the first time ever, the entire airline industry nearly collapsed and required government-generated support just to keep operating,” wrote Lodging Econometrics.
Of course, we had begun collecting data on the Top 10 markets weeks before the hijacked planes crashed and chaos ensued. Because it simply was not feasible to rewrite every area review, we considered each market individually. For example, in the New York review we started again from scratch because, as the news images from “Ground Zero” in lower Manhattan reflect, several million square feet of office space were completely destroyed. In an instant, the market had changed dramatically. Our New York reporter, Cristina Gair, lived and breathed that story for the better part of two weeks. I think the final product reflects the tremendous amount of effort she put into the package.
The staff also updated the review of Washington, D.C., which suffered a direct hit from the attack, and we tweaked the Detroit review because of the tragic event's impact on auto sales and the Motor City's link with the broader economy.
It's likely that we will not know for months how far the effects of this tragedy have rippled into our economy. The fallout still is being assessed. What we can say with certainty is that the human spirit is indomitable. New York will be rebuilt — the resiliency of its citizens assures us of that. As Mayor Giuliani unfailingly reminds us, we all need to be brave.