| Lummer's Logic |
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| Recovery
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By Scott Lummer
Chief Investment Officer, mPower |
October 9, 2001
I flew from San Francisco to New York
last week. The official reason was to see a client, but I also felt I needed to see for
myself the economic impact of the terrorist attack. Friends of mine who are New Yorkers
have been telling me about the effect on various businesses, from theatrical productions
to gypsy cab drivers.
Also, I've been writing a lot of
commentaries for mPower lately — eight over the past four weeks, including four
during the week of Sept. 17 when the markets first reopened. Many of you have written to
me in response. Although I'm happy to say that most of your e-mails have been supportive,
I also have received the investment advisor's version of hate mail. In particular, a few
of you argued that I was understating the impact on the economy, specifically as it
affected New York. So I figured it was time to have a look.
Changed Landscape
Certainly the landscape of the city
has changed — literally and figuratively. Walking near ground zero and seeing the
devastation is emotionally wrenching. The closest thing to it that I have experienced was
walking through a former concentration camp 10 years ago in Austria.
Although I had seen the pictures on
television, I was stunned to see firsthand the burned facade of the World Trade Center,
the damaged buildings surrounding it, and the National Guard troops policing the area.
Still, I almost managed to leave the scene without my eyes welling up — until I
thought of the many people I know who worked in the twin towers.
As I walked up Broadway, though, I
realized something. Yes, some businesses were closed — as indicated by the concrete
dust remaining on their windows. But the majority of the shops just two blocks away from
the center of the terror were open. The perpetual "three-days-only sale" at the
men's clothing store was in full swing. The proprietor of the jewelry store was personally
offering me 70 percent off if I would come into his shop. The woman selling red, white,
and blue ribbons for $2 (three for $5) was actively hawking her wares (I advise you to get
the three-for-$5 special because they are not made to last). It was New York commerce at
its best.
Back to Business
A bit farther away from downtown, the
scene changed even more. The subway was jammed with workers and shoppers. Two guys next to
me were arguing about whether the Mets should trade Piazza. In midtown, where my hotel was
located, the line at Starbucks was out the door. Theatergoers were battling over cabs. The
desk clerk at the Hilton reported that the hotel was 75 percent full. Quite honestly, you
would not have known that you were in a city that had been struck three weeks earlier by a
most heinous crime.
So, my trip was quite informative. It
seems clear to me that New York is in the early stages of recovery. The economic effect of
the attack has been widespread, causing a loss of jobs in many industries across the
United States and particularly in New York. Of course, many individuals will endure
hardships. But the city is much farther along than I would have guessed. And as the Big
Apple recovers, so will the rest of the country.
It will take a while for this recovery
to show up in the numbers, as we are still waiting for economic data for periods before
Sept. 11. But the economy isn't solely about numbers. Statistics tell us what the economy
did in the past — attitude tells us what the economy will do in the future.
And our attitude is much better than our enemies would have hoped for. Perhaps recognition
of that fact is why the stock market over the past two weeks has steadily risen to near
the level it was prior to the tragedy. You may accuse me (as some of you have done) of
being an optimist. To that charge, I plead guilty, but with cause — I am an American.
Focus on the Future
I also learned something about myself
on this trip. The flight to New York was the first I had taken since the attack. I admit I
was very nervous. I couldn't help but think about the fact that I was on a
cross-country-bound 767. I looked suspiciously at each passenger who boarded, and had a
huge urge to bolt toward the door. I didn't relax at all until we had been in the air for
30 minutes. But coming home the next day was a completely different story. I groused to
myself about the line of 283 jets in front of us on the taxiway. I fought viciously for
space on the armrest with the 73-year old woman next to me. In short, aside from increased
security measures, it was a typical flying experience.
Well, not completely typical. As the
plane left Newark Airport and banked to the right, the lower tip of Manhattan came into
view. If you had asked me the day before what object I would be trying to focus my eyes
on, I would have told you the crater at ground zero. But instead, my eyes found the Statue
of Liberty. I thought about how my ancestors must have felt 90 years ago, seeing her for
the first time. And for the second time in less than 24 hours, my eyes welled up, although
for a different and much more positive reason.
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