“The lock-box notion, which wouldn’t have done much to help social security anyway, to tell you the truth, is of zero help as far as the economy is concerned,” says Mr. Dunkelberg.
Kurt Barnard, a retail consultant and publisher of Barnard’s Retail Trend Report in Upper Montclair, New Jersey, says consumer spending during the all-important holiday shopping season will be stronger than last year, though barely.
“We believe that the retail outlook, based on our models and analysis, will be muted but slightly better than last year. But keep in mind that last year was very weak, so the news is not that encouraging,” he says.
Mr. Barnard is forecasting average same-store sales growth of 2.5 percent, on the basis of data collected before September 11. He does not expect the terrorist attacks to have much impact on consumer behavior over the holidays.
“The fallout was most severe during the eight or nine days following September 11. But shoppers have since returned to the malls,” he says.
Looking further ahead, Mr. Barnard says the retail sector will rebound in earnest in the spring.
In the meantime, reassuring consumers remains a paramount concern. Martin A. Regalia, vice-president and chief economist of the U.S. Chamber of Commerce, applauded the Fed lending rate cut, contending it will shore up consumer confidence and eventually spark consumer spending.
“If consumers continue to lose confidence in the economy, and thus refuse to spend, the hopes for a quick rebound in economic growth look bleak. But if consumer confidence rights itself, growth could turn around swiftly,” Mr. Regalia said immediately after the Fed action.
Though Hispanic-owned small businesses can expect to endure a slowdown mirroring the overall economy, they are poised to rebound faster in the long run, according to Frank Chow, chief economist of HispanTelligence, the research division of Hispanic Business Inc.
“The same structural elements, such as Hispanic purchasing power, that enabled Hispanic-owned small businesses to grow at a rapid rate before the September 11 attacks will enable them to weather the aftermath better than other segments of the economy,” he says.
One problem confronting small businesses of all stripes is their low collective profile in the nation’s capital. As a result, they’re often less likely than large, influential industries to be the beneficiaries of government largesse in times of crisis.
A case in point is the government’s $15 billion aid package for the airline industry. Rep. Nydia M. Velázquez (D-NY) says that while she does not dispute the need to help the airlines, the Air Transportation System Stabilization Act fails to provide relief for many businesses associated with the air travel industry – airport concessions and suppliers, for example – many of which are small, family-owned enterprises.
Ms. Velázquez, the ranking Democrat on the House Small Business Committee, has introduced legislation that would offer assistance to small businesses affected by the terrorist attacks. The Small Business Emergency Relief Act would offer low- or no-interest loans as well as payment grace periods and, in some cases, forgiveness of existing loans obtained through the Small Business Administration (SBA).
“Congress acted for the airlines. It’s time to stand up for the small businesses that were devastated,” says Ms. Velázquez.
Government assistance is already available to the roughly 40,000 small businesses in the immediate area of what was the World Trade Center. President Bush has declared a disaster area for most of New York City, meaning that Federal Emergency Management Agency (FEMA) grants and loans are available for businesses as well as public institutions, nonprofits, homeowners, and employees. FEMA is currently accepting applications for relief. For information, call (800) 462-9029.
Elsewhere, small businesses that employ military reservists called to active duty in response to the terrorist attacks may qualify for Military Reservist Economic Injury Disaster Loans (MREIDLs) of up to $l.5 million, available through the SBA.
The interest rate on MREIDLs is 4 percent, with a maximum term of 30 years. The SBA determines the amount and terms of each loan on the basis of borrowers’ financial circumstances. The filing period begins when the employee is ordered to active duty and ends 90 days after he or she is discharged.
Many in the rest of the nation’s small-business community, however, are probably on their own. And some sectors are clearly reeling. Aside from the travel industry, small businesses related to tourism and fine dining, among others, have been hit hard.
“It’s a tough time for small business. The economy was falling down before the terrorist attacks,” says Darrell McKigney, president of the Washington, D.C.–based Small Business Survival Committee. “Since September 11, a pause button has been on for small businesses. Everyone is waiting to see what will happen.”
As for government help, his organization advocates initiatives that it says would benefit the U.S. economy as a whole, such as accelerating the rate of tax cuts passed earlier this year, cutting capital gains taxes, and bolstering investor confidence by, among other things, increasing domestic energy production and giving the president greater authority to negotiate trade agreements.
Some small businesses may actually benefit in the aftermath of the attacks. Those in cleanup, construction, and security services are expected to prosper, for instance.
Still, for much of the nation’s small-business community, the watchword for the time being is uncertainty.
“This event has truly shaken the system, and only time will tell if that shock does long-term damage,” says the NFIB’s Mr. Dunkelberg.
PHOTO CREDIT: Tony Gutierrez/Agence France Presse
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