Glance at economic landscape shows uneven erosion
By Adam Geller
Associated Press
NEW YORK — A fast-moving economy doesn't stop for photographs.
But since the 9/11 terrorist attacks jolted an already unsteady economy, the nation's consumers, investors, businesses and workers have scrambled to get a fix on the changes unleashed, large and small.
Not all the changes in the nation's economic life are the direct result of terrorism. But random "snapshots" offer some insight into how the economic climate has changed — and how it hasn't.
• A year ago, the average New York hotel room cost almost $189 a night, according to PKF Consulting, a hotel advisory firm. But a severe dropoff in business travelers pushed the average bill down to about $169 as of July, the latest month for which complete figures are available. Occupancy rates fell only slightly, about 1.8 percent, because bargain-shopping casual tourists replaced free-spending business travelers.
In cities like New Orleans and Dallas, however, room rates have risen modestly since last year.
The change in tourism is also evident at Grand Canyon National Park, where the number of visitors has dropped 5.2 percent through July, to 2.6 million. At the park's South Gate, the number arriving by bus — the most popular means of arrival for those from overseas — has plunged. Through July of last year, there were almost 426,000; this year it's just 268,000.
• The dropoff in demand for airline tickets has pressured carriers to cut prices. The average price for a passenger sitting in coach on a 1,000-mile domestic flight was $100.32 in July, according to the Air Transport Association; a year earlier, it was $110.50.
At the Mojave Airport in California — which also serves as a large storage lot for airliners — 296 wide-body and narrow-body jets are idled, compared with about 50 on Sept. 10 of last year, general manager Stu Witt said.
• Job prospects are tougher. The U.S. unemployment rate stood at 4.9 percent in August 2001. It had risen to 5.7 percent a year later.
Some of the most severe job cuts have come in industries like aerospace, where the terrorist attacks had a severe impact. In September 2001, there were 93,000 employees at Boeing Co.'s commercial airplanes division, the world's largest commercial jet manufacturer. A year later, the Renton, Wash.-based unit had 67,800 workers.
• The past year has seen sharply higher bills for business owners shopping for insurance. Premiums were already rising — up about 10 percent to 15 percent, before last September's attacks. But worries of future attacks have made insurance even pricier.
Last year, a business with $1 million in annual revenue would have expected to pay about $5,550 for commercial insurance and related costs. That jumped about 30 percent to $7,220, according to the Insurance Information Institute.
The costs are significantly steeper for owners of landmark properties. The New Jersey Sports and Exposition Authority found that out when the liability policy on its Meadowlands sports complex expired last September. It went shopping for a new policy and saw its annual premium go up from $700,000 to $2.4 million.
• The market for office space has also shifted. At Chicago's Sears Tower, where some tenants worried last fall they might be targeted for a follow-up attack, the combined vacancy rate, including subleases, is 13.6 percent, up from 5 percent at this time last year.
• For consumers, though, the economic tremors of the past year have in some ways made life easier, as Federal Reserve policy-makers cut interest rates.
A year ago, homebuyers signing up for a 30-year fixed-rate mortgage were locking in at an average interest rate of 6.89 percent, according to Freddie Mac, the mortgage company. As of last week, the average rate for the same loan was down to 6.15 percent, the lowest since Freddie Mac began tracking three decades ago.
Car buyers have enjoyed a similar boon, with automakers offering zero-percent financing in the months after the attacks.
In August of last year, 48-month loans for new cars from banks carried an average interest rate of 8.31 percent, according to a Federal Reserve Bank survey. This month, banks are offering the same loans with interest rates ranging from 6 percent to 7.5 percent, according to the National Automobile Dealers Association.
• Investors have endured a roller-coaster ride since last year.
On Sept. 10, 2001, the Dow industrial average closed at 9,605.51. It was at 8,602.61 on Wednesday — a 10 percent decline. The markets, which never opened on Sept. 11, 2001, hit a post-attack low of 7,702.34 on July 23.
