Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: George Cowsar who wrote (35420)	9/14/2001 2:44:49 AM
From: puborectalis	Read Replies (1) \| Respond to of 37746

Posted at 8:17 p.m. PDT Thursday, Sept. 13, 2001 Industry loss estimates stretch into the billions BY CHRIS O'BRIEN AND JENNIFER BJORHUS Mercury News The total financial impact of Tuesday's attacks may not be apparent for months, but estimates for losses in some industries are already stretching into the billions of dollars. Analysts agreed that there are still too many variables and too little data to know how high the cost will be to the U.S. economy. And many losses may be offset by things like increased construction spending, lower interest rates, and government spending for rebuilding and retaliation for the terrorism, a public spending package expected to start at $40 billion. But some industries have already lost billions of dollars that will likely never be recovered. An airline association estimated its members have lost about $10 billion this week. Insurance companies expect to pay out $10 billion to $25 billion. Investment banking and securities firms -- many of whom were based in the World Trade Center -- have lost millions of dollars in trading opportunities with stock markets closed, and will have to spend millions more to rebuild their offices and infrastructure. Most stores closed for all or part of Tuesday -- a big blow to an industry that rings up on average $8.8 billion a day in sales. ``It's pretty clear that these numbers mean that the economy is not going to perform as well this quarter as we had hoped,'' said Steven Cochrane, senior economist for Economy.com. Even before Tuesday's terrorist attacks, the economy was sliding closer to recession. More evidence of a weakening economy appeared in a survey released Thursday. Consumer confidence fell sharply in early September, even before the attacks, according to a University of Michigan survey. The preliminary Consumer Sentiment Index fell to 83.6 in September -- down from 91.5 in August. Significantly, both consumers' assessment of the current state of the economy and their expectations for it six months from now deteriorated noticeably. The economic effects of the terrorism continue to ripple out in ways only just becoming apparent. For instance, news and television organizations -- a group already suffering from a downturn in advertising spending -- are spending millions of dollars on increased coverage in the form of larger print editions and 24-hour coverage. At the same time, many newspapers and TV networks are running little or no advertising to make room for news. And many of the country's publishing houses are based in Manhattan and have been closed for some or all of this week. In general, employees at many businesses remain distracted by the unfolding events. Some are still stranded because airplanes were grounded. Others are simply less productive because they're checking the TV or Internet for the latest developments.. William F. Ford, senior economic adviser for TeleCheck, a financial services company for retailers, said this kind of distraction contributed to the recession in the early 1990s. The time consumers and employees spent watching developments in the Gulf War was time they weren't shopping or working. ``We're having what I like to call a `CNN event,''' said Ford, a former Federal Reserve president. ``It's not a matter of consumer confidence. It's a matter of how they're spending their time. That's what could really have an impact.'' Even as analysts wait for more data, initial estimates in some industries suggest how staggering the final tally might be: Airlines. The International Air Transport Association said Thursday that its member airlines have already lost at least $10 billion in ticket revenue as well as costs for maintaining grounded planes and paying workers. In addition, the industry will probably have increased security costs and significantly reduced traffic as consumers avoid air travel. Insurance. Insurers are bracing for a Hurricane Andrew-size hit. That 1992 storm cost the industry an estimated $15.5 billion and is considered the country's most costly insured catastrophe. The National Association of Insurance Commissioners put the attack's early loss estimates in the $10 billion range, while officials at Chubb Corp. have placed the figure closer to $25 billion. Those estimates would include claims ranging from property loss to workers' compensation, business interruption and life insurance. However, most observers are cautious. ``Early numbers, time and time again, are incorrect,'' said Nicole Mahrt, spokeswoman for the American Insurance Association. ``The bottom line is we don't know what the costs are going to be.'' Whether or not terrorism is even covered by various insurance policies remains a question in the industry. Retail. Though many shopping centers only closed for a day, merchants still took a big hit. The retail industry generates about $3.2 trillion annually, or about $8.8 billion each day on average. Even after stores reopened, some merchants experienced less customer traffic as people remained distracted and jittery. Securities. Each day trading is halted costs the securities industry about $800 million, according to Economy.com analysts. The U.S. stock markets have been closed since Tuesday and are set to resume Monday. More than 30 brokerage firms had offices in the World Trade Centers. There are still no real estimates about the loss of people and infrastructure that was lost.