greatest success after introducing zero-interest financing, which led to record sales in October, according to John Ryding, a senior economist at Bear Stearns & Co. “The auto industry is having to pay to get the consumer to shop, and the consumer is responding to those incentives,” he says.
But, in the meantime, blacks, experts say, are more vulnerable to getting sucked down by the economic undertow than any other group. U.S. Bureau of Labor Statistics data show that blacks represented as much as 69% of the layoffs in some states, with more than 415,000 losing their jobs nationally, since September 11. “We are the ones that bus the tables; we are the skycaps and the redcaps,” says Ron Owens, a part owner of Arlington, Virginia-based Laughlin, Marinaccio & Owens Advertising, which, among other audiences, markets to African American and Hispanic consumers. “The adage goes that when America gets a cold, black America gets pneumonia.”
AT THE END OF THE TUNNEL?
When things will get better is anyone’s guess; but the pieces are in place for an upturn in the economy. “A combination of apprehension for safety and apprehension for well-being will affect spending until the first quarter of 2002,” predicts Dr. Margaret Simms of the Joint Center for Political Sciences and a member of the BE Board of Economists.
The government is doing its part. The Federal Reserve has made 10 interest rate cuts in 2001–three since September 11–with the hopes that the cuts
will lead to increased spending by both companies and consumers by lowering borrowing costs. Even though interest rates are at their lowest level since the 1960s, many experts see more interest rate cuts on the horizon. Then there’s President George W. Bush’s economic stimulus package, which is designed to breathe life into the economy mainly through tax cuts. And while unemployment is still higher than it has been in recent years, many businesses have long since restructured operations and conducted layoffs in reaction to the downturn as the economy was showing signs of slowing before September 11. This means that the worst may be over in terms of unemployment.
The experts expect the remarkable resiliency of the consumer to continue. “First of all, people get used to anything; and, they can get used to an environment where there are warnings on a constant basis of terrorists attacks,” says Albertine. “Second, and more important, monetary policy is really stimulating [the economy].”
Though the domino effect of the September 11 attacks left no industry completely unaffected, there’s no doubt that the recession it helped spur will eventually end. The United States has weathered nine recessions since World War II, and this one will eventually end as well. And although the terrorist strikes and fear of additional attacks continue to impact the economy, industrial nations have survived in the face of terrorist attacks for decades, including England and Germany. The United States, its businesses, and consumers will adapt.