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This page was last updated on October 08, 2001
In the month of September, over 200,000 Americans lost their jobs. This is the largest number of layoffs, in a single month, within the last 10 years. To make matters worse, many of these layoffs were before the September 11th attacks.
The evidence is clear that America was heading into a recession before the terrorist attacks. Now it is clear that the recession will be much worse than before.
Within one week after the attacks, the major airlines and airplane manufacturers in America (such as Boeing) laid-off 100,000 workers. The reason was the dramatic reduction in airline travel following the attacks.
The travel industry in California, and all of America, is being hurt very badly. Within the last 2 weeks, I have been on several business trips within California and have seen the severe reduction in travel.
Although we are warned to come to the airport 2 hours early to pass through security, I have found that the security check is quick because there are few passengers. Many flights have been cancelled, although everyday the number of passengers is increasing as life returns to normal.
For the first 2 weeks after the attacks, hotels in California were empty. The Hyatt Regency at the San Francisco airport had a 3% occupancy rate. That means that only 3% of the rooms were full with travelers. 97% of the rooms were vacant (empty.)
I had a chance to walk to the Bonaventure hotel in downtown Los Angeles. This hotel has 5-6 floors of restaurants. Almost all are closed. Usually there are many Japanese tourists and businessmen, but there were none.
My secretary went on a vacation to Hawaii. Actually, this is a great time. Nobody is traveling, so the flights are empty and the airlines and hotels are offering great discounts.
Obviously the tourism industry is in trouble. Tourists are very important to the California economy. Soon all the major airports will announce major layoffs. The tax revenues for the state government are $500 million ($500,000,000) less than expected this month (that is about 60,000,000,000 yen).
California, however, will benefit somewhat from the attacks on Afghanistan that started on October 7th. The defense and aerospace industries are still strong here in California, and since most weapons include computers and computer chips, Silicon Valley will increase shipments to the military.
Most economists are predicting a short recession, followed by a strong recovery. However, nobody knows how long the war against terrorism will last, and when consumers will start buying again. Unless the war is short, most consumers will worry about new attacks in America, and will worry about their jobs. And they will be very careful with their money. Unless consumers start spending again, the recession in America will continue.