Last week's attacks on New York and Washington are already having a devastating effect on the U.S. economy, and some analysts are warning that the worst is yet to come.
Banks, airlines, plane makers, insurance companies, entertainment companies, travel and leisure firms, online travel agencies… the list is dismally long of individual companies and entire industries that are already being affected by an abrupt drop in consumer and business spending — a decline that unexpectedly came in an already shaky economy.
What it all means, say economists, is that the U.S. economy is going to experience some extremely tough times in the months ahead, despite lower interest rates, tax rebates, talk of further tax cuts and now what financial markets are dubbing a "war premium" as efforts to find the culprits behind last week's unspeakable acts goes forward.
Even soothing words from Federal Reserve Chairman Alan Greenspan, testifying before Congress today that any short-term uncertainties will not undo long-term prosperity, did little to instill confidence on Wall Street.
"Consumers are like deer in the headlights. They're just paused and waiting to see what happens next," said Sherry Cooper, chief economist with Harris Bank / Bank of Montreal. Cooper downgraded her firm's forecast after last week's attacks to reflect what she expects will be a much longer time-frame for recovery.
Bad News Abounds
The evidence is almost too far flung to track.
In Manhattan, few are in a shopping mood, and visitors to the city have either left in a scramble or canceled their plans. Flagship department stores such as Barneys, Bloomingdale's and Saks Fifth Avenue are practically empty; the landmark Plaza Hotel is considering closing its famed Oak Room and Oyster Bar because of lack of business.
At the Loews Hotel in Miami Beach, occupancy was at 12 percent Tuesday down from 70 percent last Monday. Convention meetings scheduled for the next few weeks are being canceled.
And it's not just tourists too shell shocked to travel. Hundreds of meetings and conventions are being canceled across the nation, a trend analysts say may drain billions more dollars out of a travel industry already staggering before last week's terrorist attacks.
"The airlines are the vehicle, for the most part, for delivering guests and business travelers to our doors," said Jonathan M. Tisch, the chief executive of Loews Hotels. "If the people are not flying, they are not staying in our hotels. If they are not in hotels, then they are not eating in restaurants or shopping in retail."
Other industries, too, are reeling from the effects. The cruise line industry is suffering as travelers cancel their vacation plans or simply decide they don't want to fly to the destinations where the ships depart. Both Carnival Cruise Lines and Royal Caribbean have indicated bookings are down about 40 percent in the past week.
Greenspan, in his testimony, acknowledged too that the unprecedented shutdown of America's air travel and tightened border restrictions have led to dramatic shortages of parts and products. "Automakers, for example, are reported to have pared production and even closed some plants in the past week largely owing to supply shortages though doubtless short-term demand uncertainties have also played a part."
Lots of Layoffs, Warnings
Many companies wasted no time sharing their expected bad news with Wall Street, unveiling expectations of slowing sales and redundancy of workers.