- The Washington Times - Thursday, September 13, 2001

The terrorist attacks in New York and Washington on Tuesday eventually will hit consumers in the wallet, analysts say.
Airfares will rise, as airlines add more security. And if the attacks push the economy into a recession, employers are likely to lay off workers, according to analysts.
Not all the news is grim: Hotels may cut rates to attract travelers who would otherwise be put off by rising airfares. Gasoline prices and insurance rates are unlikely to rise immediately, and investors who don't pull their money out of Wall Street probably will be rewarded, analysts say.
"Everything is interrelated. It's one of the great strengths of our economy, but it's also one of the things that make things difficult to predict," said James L. Brown, director of the Center for Consumer Affairs at the University of Wisconsin at Milwaukee.
Higher airfares are expected, said Terry L. Trippler, an aviation analyst for online travel service OneTravel.com Inc. Airlines will beef up security, possibly adding armed guards to all flights, he said.
"These rent-a-cops at the terminal aren't enough anymore. Things have changed forever," Mr. Trippler said.
The cost of additional security is likely to be passed on to consumers, although the government could pay some of the costs, said Richard M. Copland, president and chief executive of the American Society of Travel Agents trade group.
"This will be the cost of air travel. It's something the traveling public will have to accept, and I think they will. There won't be a rebellion," he said.
Hotels may cut rates to keep travelers' business, Mr. Brown said.
The U.S. hotel industry, already hurt by a decline in business travel spending, will now suffer its worst performance in 33 years as terrorism fears mount, PricewaterhouseCoopers researchers said yesterday.
The firm projects a decline of 7 percent to 11 percent in the last four months of the year compared with last year.
Consumers could take the biggest hit to their wallets if a full-blown recession forces employers to lay off workers, as many economists have predicted.
Midway Airlines, already in financial trouble due to slumping business travel, said yesterday it will suspend all flight operations, throwing 1,700 employees out of work.
"There will be a negative impact in the midterm. People will be worried and curtail their spending," said Celia Chen, senior economist for Economy.com Inc., an online research group.
Gasoline prices are unlikely to rise if oil supplies remain stable, as expected, analysts said. Insurance rates are also not expected to rise, even though the insurance industry expects record property liabilities from the attacks on the World Trade Center and the four hijacked airliners.
"The average consumer, with homeowner's, auto and life insurance, won't see an instant effect on rates. Insurers can't just raise prices the way Procter & Gamble does with toothpaste," said Carolyn Gorman of the Insurance Information Institute.
The nation's 100 million stockholders who own shares outright or in retirement plans should probably keep their money in the market, analysts said. History suggests Wall Street rewards patient investors and punishes panic sellers, said Richard E. Cripps, chief market strategist for Baltimore brokerage Legg Mason Inc.
The market is expected to take a big dip when trading resumes. The Dow Jones Industrial Average dropped 17 percent after the start of the Gulf war in 1991, but quickly recovered, he said.
"The people who do the panic selling aren't the little guys with the mutual funds. It's the traders who are sitting on a bigger margin," Mr. Cripps said.
This article is based in part on wire service reports.


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