Darryl Mccray, 38, is one of the many business owners still reeling from the effects of the September 11 terrorist attacks. “Business came to a grinding halt,” says McCray, owner of House of Nubian (www.house ofnubian.com), an 11-year-old store that sells ethnic jewelry and clothing just a few miles from the former site of the World Trade Center in New York. “I’ve lost about 90% of my business.”
Though McCray’s business was exceptionally hard hit–being located in the part of lower Manhattan that was shut down after the attacks–he’s far from alone. The terrorist attacks sent ripples throughout the U.S. economy, pushing a nation already on the brink into a full-fledged recession. Industry after industry is reporting lower sales and, in turn, placing fewer orders, impacting their suppliers in a domino effect that begins and ends with the American consumer.
On the surface, the airline and insurance industries were hardest hit. Fewer people flying impacted not only the airlines but also their suppliers, as well as the owners of kiosks and other businesses located within airports. Insurance companies were inundated with claims, and forced to shell out billions of dollars. Their losses reached an estimated $40 billion to $70 billion. Newspapers and magazines, which rely on advertising dollars, are also seeing a decline in ad pages–a big blow to an already depressed market.
But beyond that, businesses of all sizes in various industries are feeling the impact of September 11. Brokerage houses are reeling from a one-two punch, recording losses related to stock market investments and closed accounts, as disenchanted investors take what’s left of their money and run. Entrepreneurs are also hit, as venture capitalists become more risk-averse, investing in existing businesses rather than financing start-ups.
Even the entertainment industry is affected. The October 2001 release of Warner Brothers’ Collateral Damage, a film starring Arnold Schwarzenegger as a firefighter whose family is killed in a terrorist bombing, was postponed, and the film is scheduled for February 2002. Meanwhile, advertisements and trailers for next summer’s Spider-Man film by Sony Pictures were yanked because they prominently featured the twin towers.
THE IMPACT ON BUSINESS
The picture is grim on Wall Street. For 2001, corporate earnings are expected to decline between 16% and 17%, according to Charles Hill, director of research at First Call/Thomson Financial, a research firm serving the financial community. For the fourth quarter of 2001–the first full quarter since the terrorist attacks–Hill predicts that earnings will continue to plummet, with a 22% decline. Of that decline, he attributes 10 percentage points to the terrorist attacks’ affect on corporate America.
And small businesses are no exception. Many are coping without key employees, as military reservists are called to active duty. More closely tied to consumer spending habits than large corporations, small businesses were the first to feel the pinch as consumers curtailed spending.
For Carol Hall, principal at Carol Hall & Associates, the September 11 attacks resulted in about $85,000 in lost revenues. Her Los Angeles-based public relations, marketing, and corporate events management consulting firm had