2001: Trouble and triumph
New York's economy still limping badly
By Henry Goldman
Bloomberg News Service
NEW YORK — Since 1894, when Bob Levy's great-grandfather first sold linens from a pushcart, Harris Levy & Co. had prospered on Manhattan's Lower East Side. Then came the World Trade Center attack.
Levy, 48, said Sept. 11 did what "two World Wars, the Great Depression and countless recessions couldn't do" — hurt his Grand Street linens store to the point where 2001 sales may be down 25 percent. "We've bounced back a bit," he said, "but nowhere close to where we used to be, when customers walked in from all over the world."
In the three months since the attacks, the rebuilding and reconstruction of the city are well under way. Consumers have returned to spend. Merchants have reopened their doors. Wall Street has hummed back to life.
But the economic ripple effects are still felt throughout the area. And like other neighborhoods in the five boroughs, to varying degrees, the Lower East Side is suffering. Levy said almost all of the merchants on his block "have gotten hammered."
The city's Independent Budget Office, an agency that acts as a fiscal watchdog, forecasts that New York's economy will shrink 5 percent in 2002. That would be a sharper drop than in the recession year of 1990, when it fell about 4 percent, though "most economists project that" this slump "won't be nearly as protracted" as that of the early 1990s, said Ronnie Lowenstein, director of the office.
Mayor-elect Michael Bloomberg, who takes office Tuesday, said the city faces "very severe economic times." Bloomberg, the founder of Bloomberg LP, parent company of Bloomberg News, said his biggest challenge is to "figure out how this city is going to do more with less."
It won't be easy, said economist Marcia Van Wagner of the nonprofit Citizens Budget Commission. Most economic trends are beyond mayoral control, she said.
"You start with the fact that Wall Street bonuses will be down about $4 billion from $14 billion last year, and it has ripple effects," she said. "People don't go out to eat, it affects not only restaurant owners and workers, but baby-sitters, taxi drivers — everyone gets hurt."
The city's $25 billion-a-year tourist industry will be down 12 percent for 2001, compared with 2000, and hotel occupancy in December was 73 percent, a decline from 85 percent a year ago, according to NYC & Co., the visitors bureau.
The city's unemployment rate was 6.9 percent in November, the highest since February 1999. City Hall expects about $1 billion less tax revenue in the current fiscal year, which ends June 30, 2002.
Tougher times have arrived on the Lower East Side and adjacent neighborhoods of Community Board 3, a swath of Lower Manhattan where 165,000 people live.
The area begins at the Brooklyn Bridge, about 10 blocks northeast of Ground Zero. It stretches north through Chinatown to the Lower East Side, an immigrant gateway since the 19th century. It includes the East Village, where 1960s hippie culture gave way to trendy affluence. Two-bedroom apartments, once squatter quarters, rent for $2,500 a month or more.
Community Board 3's shops and restaurants are emptier now, shopkeepers and business groups said. It's not just absent tourists. Residents are spending less.
On Allen Street, Oswaldo Burosso, 62, clipped a customer's hair inside the barber shop he's run for 22 years and said business is off 40 percent since Sept. 11.
"I've never seen it so bad," he said, gesturing toward empty waiting benches. "We were always full of customers all day long," he said. "Now nobody wants to spend money on a haircut."
