New Haven faces uncertain economic ffuture

The New Haven economy, after years of lackluster performance, has finally begun to show improvement; unfortunately, it now may face another severe recession as a result of Sept. 11. However, in light of the proactive stance of the national and local governments and the diversity of New Haven's economy, it is difficult to predict the extent of the effects of the recent terrorist attacks.

TED DISKANT/YH Mayor John DeStefano hopes that biotechnology and a push to keep business local will help New Haven weather the storm.

"I've never seen so much variation in economic predictions... we're in uncharted waters," Don Kleeper-Smith, the chief economist and director of research at Centerprise Advisors in New Haven, said. "Pearl Harbor was an attack on military bases, this was an attack on our financial center. There is a tremendous degree of uncertainty."

His comments echoed those of Federal Reserve Chairman Alan Greenspan. "Nobody has the capacity to fathom fully how the effects of the tragedy of Sept. 11 will play out in our economy," he told a Congressional committee on Wed., Oct. 17.

While not impervious to recessions, New Haven's economy may be slightly more resistant than the overall national economy. This stability is rooted in New Haven's dependence on industries such as education, health care, and biotechnology, which tend to remain relatively secure during an economic crisis. However, businesses and tourism may see some difficult times in the coming months.

So far, the national statistics are ominous. According to the Labor Department, employers cut 199,000 jobs outside of the farm sector in September, compared with 84,000 jobs in August. Also, the Commerce Department reported that retail sales fell 2.4 percent in September, the biggest drop since the department began reporting this statistic nine years ago. Consumers are important to the overall health of the economy because consumer spending drives two-thirds of the US's gross domestic product. If they stop spending, a recession will most likely occur.

National trends have especially affected local businesspeople. "September was not the best month," General Manager of Chapel Square Mall Jack Maher said, although he acknowleges that business has returned back to normal lately. "I have not seen a decline as a result [of the attacks]," he said.

However, New Haven Budget and Management Director Frank Altieri has noticed a slowdown in the city's restaurant business. He spoke with one owner who was considering closing for lunch, especially on slower days. "Generally, her opinion was that business has been slow throughout the city," he said, although he was unable to predict how many restaurants in New Haven were suffering similar fates. "There are so many small little restaurants that it's hard to put your arms a-round it."

The tourism industry throughout New Haven and the rest of Connecticut has been hit hit. According to the New Haven Register, some small travel agencies are bringing in less than $100 a day when they used to average between $5,000 and $10,000. In the local hotel industry, "80 percent of business is corporate," David Greco at the New Haven Convention and Visitors Bureau explained. "When that falls off, it is hard to recuperate."

He mentioned a campaign that Mayor John DeStefano, Jr. will present to Connecticut Governor John Rowland, which is called "Keep it in Connecticut," and will encourage businesses to hold conferences locally. DeStefano has also approached local nonprofit agencies about providing aid in the form of job training.

Robert Santy, President of Regional Growth Partnership of South Central Connecticut, expressed concern that with the decrease in government revenue, local towns and cities would need to restrict their spending. Most local governments "have not managed through a recession" and need to be prepared, he said.

Altieri was not expecting government cutbacks to affect this year's city spending. "If for any reason there is an attempt on the part of the legislature to cut large grants, that would be devastating. We have already built-in that revenue into the current budget." Altieri stressed that although the government of New Haven has not done anything to combat the economic slow down, "We are prepared."

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