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Cowardly acts won't bow American spirit
© St. Petersburg Times, So how will this change us? Before Tuesday, the United States already was on the verge of its first recession in nearly a decade. Will the terrorist obliteration of the World Trade Center, our biggest economic symbol, a direct hit on the Pentagon, four hijacked planes and thousands killed on our native soil send us screaming into negative economic growth? Tomorrow morning at 9:30, the U.S. stock markets open for the first time in a week, the longest trading shutdown since the federal "bank holiday" during the Depression. Tomorrow, we'll start to get a glimpse of what we're all made of. Remember, recession is just a word. If the country enters one -- as seems almost inevitable now -- it won't last long, most economists predict. Come Monday, conventional wisdom says the markets could plunge with the Dow dropping by as much as 1,000 points, or about 10 percent. To deter such a decline, some folks began sending blanket e-mails late last week urging people to buy stock on Monday to show support for the country. "Let us surprise our enemies by showing our confidence in America and do that by buying shares of your favorite stock or mutual fund," says an e-mail sent Friday by Louis S. Harvey, president of Dalbar, a Boston financial research firm. Of course, it's not just Monday but what happens later that really counts. Will markets bounce back once still-stunned investors shake off their vague fears, grab some bargain-price value stocks and realize a bunch of cowardly thugs with box cutters can't drag us down for long? Or will we freeze, like deer in the headlights, and let the economy stagnate? Much depends on our political and economic leaders. Even more depends on our personal resolve as we head into a modern equivalent of slow, grinding war against hard-to-find terrorists. As investors, are we more angry than depressed? In the wake of the biggest terrorist actions in modern U.S. history, there's plenty of healthy defiance. "We're going to demonstrate to our enemies and our friends who we are," James Dunn, a managing director of Sandler O'Neill & Partners, an investment banking firm missing more than 60 of 166 employees who worked in the World Trade Center, told a reporter last week. A national poll of 1,074 Americans conducted Friday found that 80 percent thought the economy would be "moderate to very strong" in the aftermath of the attacks. And, according to the E-Poll survey, 88 percent of those with stocks, bonds or mutual funds said they do not plan to sell in the coming weeks. (Tampa Bay area investors registered a similar reaction when asked Friday by Times reporter Kris Hundley. See her story, which starts on the front page of this business section.) Individual investors are not alone. The giant California Public Employees Retirement System and other pensions funds say they will buy stocks Monday if shares decline "precipitously" after markets open. At Tampa's Jerry Ulm Dodge, a N Dale Mabry Highway dealership, owner Jerry Ulm said his business all but stopped Tuesday after the violence. But he's not worried. "I just have a feeling that the American people are not going to panic in the financial markets," he said Friday. "I think they will refuse to let this terrible incident get them down." Ulm may be onto something. A most unusual streak of economic patriotism. So how will this change us? The loss of so many lives and such vivid, televised hits in New York and Washington delivered a serious body blow to the American spirit. Not that U.S. consumers were bullish before the terrorist strikes. Preoccupied as we were last week, we failed to notice Thursday's University of Michigan numbers on consumer confidence. They were gathered Monday, one day before the attacks. The survey found consumer confidence fell abruptly in the first two weeks of September to its lowest level since March 1993. Add in the next day's attack on America, and most economists say the effect on the already weakened consumer will help push us all into a recession. The terrorist impact will affect us in so many ways: REAL ESTATE: Losing the entire World Trade Center and nearby buildings means New York City has lost close to 30-million square feet of office space. That's more than the 28-million square feet of commercial office space that exists in all of Tampa and Hillsborough County. TOURISM: Reduced airline flights (due to extra safety precautions) and fear of flying spell big trouble for such tourist-dependent places as Orlando's theme parks and the Tampa Bay area's beaches. The fall season is slow, but bookings for winter are starting to take place -- and be canceled -- now. More casualties: travel agents and cruise lines. In search of a bright side, Carnival Corp. stressed that some of its cruise ships operate out of gulf ports (including Tampa) where many customers drive, rather than fly in, to their ships. A survey of 800 U.S. adults conducted hours after the attacks found that one-third of American business and leisure travelers think they would cancel a trip. Two unexpected beneficiaries? Amtrak's railroad ridership has soared 60 percent since the terrorist attacks. And analysts say video-conferencing will win more support from reluctant business travelers. INTEREST RATES: Before last week's attack, Federal Reserve chairman Alan Greenspan had aggressively lowered short-term interest rates seven times since January. But he had made it clear further rate cuts were unlikely. No more. Economists expect at least one more cut by the Fed -- possibly even on Monday, but certainly within the next few weeks. CAPITAL RAISING, IPOs: If stock prices suffer, the number and volume of new public offerings by corporations will decline. And initial public offerings, already a market in the Dumpster, will become even further depressed as investors put more of their money in less risky holdings. LEGAL: Already, families of the victims killed Tuesday are starting to consider filing civil lawsuits that could produce staggering damage awards. But this time, there are some new twists. Because of the nature of the attacks, the Association of Trial Lawyers of America has called for an unprecedented moratorium on filing lawsuits. Already, the airlines are asking Congress to grant them legal protection, arguing the attacks were beyond their control. Congress is considering a $2-billion bill to compensate airlines for the security shutdown of airports and to help prevent financial insolvency. TAXES: In Congress, Republicans started drafting plans for a package of business tax breaks and a reduction in the capital gains rate. Democrats are more gung-ho about it since the attacks. RETAIL: Tampa's over-hyped International Plaza opened its mall doors Friday to a subdued first day of business (a tropical storm did not help). Glitzy tenant Neiman Marcus postponed a grand opening celebration at the mall as well as the unveiling of its 75th anniversary Christmas Book in Dallas. If consumer spending wimps out, stores will find it tougher than ever to loosen customer purse strings in time for the holidays. My personal bet? Never underestimate our national obsession to shop. ADVERTISING: Companies are yanking or postponing an already modest volume of TV, magazine and newspaper ads in the wake of the terrorist attack. Near term, the delays are out of respect and because there's no sense trying to reach a numb and preoccupied audience. Longer term, companies want to reassess their ad campaigns after such a violent event in U.S. history. None of this bodes well for the revenue-challenged media industry. When Tampa car salesman Jerry Ulm bought his Dodge dealership in fall 1990, business was bad, the recession was deep and the country was gearing up for the Persian Gulf War. "We were undercapitalized and not very financially stable," Ulm recalled. "It was very frightening." Eleven years later, Ulm sees plenty of parallels as he braces for another economic downturn and the possibility of another war. But this time is different. Ulm is more confident of his own business and his faith in Americans during trying times. Truth is, the U.S. economy is tougher than it looks. Just ask the director of the UCLA Anderson Forecast in Los Angeles. "An economy, unlike a building, is an organic self-healing system which doesn't tumble down when subjected to the shock of a terrorist attack on the World Trade Center," Edward E. Leamer said. Got that right, Ed. So how will this change us? For the better. Not in any way hoped for by terrorist scum. - Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.
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From the Times Business report
From the AP
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