- The Washington Times - Friday, September 28, 2001

Jobless claims surged to a nine-year high of 450,000 in the week following the Sept. 11 terrorist attacks with a fifth of the increase in New York alone and help-wanted advertising plummeted to an 18-year low.

The 58,000 jump in first-time claims for jobless benefits reported by the Labor Department represents the first wave of unemployment caused by layoffs in the wake of the attacks, economists said.

Many of those filing for benefits are low-income service workers at airports, airlines, hotels, restaurants and other businesses immediately hit by the collapse of travel after the attacks.

Further claims are likely to be filed in coming weeks by higher-paid workers affected by layoffs at the airlines and aircraft manufacturers who received severance pay and are not yet eligible for benefits.

These workers are joining the ranks of America's 3.3 million unemployed at a time when job openings have almost evaporated, according to a help-wanted ad index maintained by the Conference Board.

Federal, state and local governments also are feeling the loss as the mounting layoffs have caused a precipitous drop in payroll and income taxes. White House and congressional budget estimators now say the budget surplus this fiscal year will be around $120 billion, more than $30 billion lower than they predicted just two months ago because of the sinking economy.

Job losses stemming from the attacks are expected to total at least 75,000 in New York in the short term and 60,000 in Washington if Ronald Reagan National Airport remains closed. Rebuilding of devastated lower Manhattan is not likely to begin for another six months or longer, New York officials say.

"The disruption of the economy is very significant," said Mark Zandi, economist at Economy.Com in West Chester, Pa. "It's going to be a very difficult period and it's going to be hardest on workers."

Yesterday's report showed an increase in jobless claims in Michigan, where auto plants were shut immediately after the attacks because of parts shortages stemming from a temporary stoppage of air transport, as well as several Southeastern states where manufacturers cut jobs.

Many of the 122,000 workers laid off by the airline industry in the past week have not yet filed for benefits. But they are likely to do so soon as a number of states including California are waiving rules requiring them to wait a week before filing.

Cutbacks are also being felt in the hospitality industry and aerospace. Demand for hotel rooms plummeted by more than a third after the attacks, and executives in that industry are eyeing mass layoffs. LSG Sky chef, an airline catering service, said it is putting 4,900 workers who prepared food for flights in the United States on unpaid leave.

"It's a very painful process, but vital for the future survival of our company," said LSG Chairman Hanns Rech.

Boeing Corp. will begin issuing pink slips to the first of approximately 25,000 workers around Oct. 10, keeping jobless claims at high levels for several months.

Even the most buoyant sector of the economy before the attacks housing is feeling the impact.

The National Association of Home Builders yesterday reported that buyer traffic in new housing developments dropped 10 percent to 20 percent as consumers withdrew in response to the attacks.

"We attributed that to the CNN effect: People were glued to their TVs," said David Seiders, the association's chief economist.

"Shock waves from the attacks" will continue to hold down new home sales for the rest of the year, despite big cuts in interest rates, he said.

In the last month before the attacks, new home sales rose 0.6 percent to an 898,000 annual rate, the Commerce Department reported yesterday.

The department also said new orders for big-ticket manufactured goods declined by 0.3 percent last month.

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