Sept. 11 attacks could color holiday shopping season

By Kathy Helms-Hughes

STAR STAFF

   It will take several months before we know the full impact the Sept. 11 terrorist attacks had on the local economy. Some local merchants already experiencing a slowdown in business believe the tragedy made a bad situation even worse. Other businesses appear unchanged, while still others have noticed a sales increase -- good news in tough economic times.
   One way to boost the economy is to boost consumer confidence. Though currently there is enough negative news surrounding state and local government operating budgets to give consumers the jitters, there are a few bright spots on the financial horizon:
   On Wednesday, the Labor Department reported the number of jobless claims, which soared following the Sept. 11 terrorist attacks, fell for the fourth straight week.
   Other good news included a decline in gasoline prices and a rebound in the stock market, according to Elizabethton City Manager Charles Stahl.
   "With lower gasoline prices for the moment ... it helps the auto industry and helps people that are maybe considering buying more luxury vehicles. Gas mileage per gallon on some of those vehicles is maybe not as economical as others, but gas prices will keep those vehicles still viable commodities," he said.
   Locally, following Sept. 11, some businesses such as Carter County Motor Co., had one of their better sales months.
   Jim Hughes, manager, said, "We had one of our best months last month because Ford had zero percent financing. After the 9-11 deal, they didn't want the economy to slow down, so Ford, General Motors and all of them came out with zero percent financing for up to 60 months, and we had one of our better months just because of that.
   "This month, it's slowed down a little bit because they've taken it away. They've still got zero (financing) but it's just up to 36 months. That makes it a bigger payment. (Business) is still pretty good, but not like it was last month."
   Hughes said he believes the added incentives for car buyers will continue.
   "They have to keep the economy up and I'm sure that they'll have some kind of incentives to keep this going on -- we hope so, anyway. There's no way headquarters can let their company go down, as far as letting production go down. They've got so many bills to meet and that's the only way they can do it. My understanding is the auto industry is directly or indirectly 80 percent of the world economy," he said.
   With fewer people taking to the skies and a decline in the price of fuel for automobiles, small businesses such as Cloudland Market in Roan Mountain, could benefit.
   Since Sept. 11, business at the market has been a little off, according to Wilma Boone, who co-owns the store with her husband, Reece.
   "Ours drops after Labor Day anyway, to a certain degree up here, on account of the park," she said, however, her husband said he could not see any significant decline.
   "I hadn't really noticed that much difference in it either from previous years," Mrs. Boone said. Her customers also don't seem to be more cautious in their spending.
   As thousands of area consumers head to the stores today to kick off the holiday shopping season, they may not consider how shopping at home can impact their community.
   However, Stahl said Wednesday, the sales tax consumers pay if they're shopping locally comes back to Elizabethton and helps fund the services the city provides.
   "We talk about shopping locally, but people don't realize that there is a direct correlation between shopping locally: You're not only helping those businesses, but you're also helping fund the services that we all use," he said, including schools, roads, and law enforcement.
   In order offset the downturn in business, the Federal Reserve has cut interest rates 10 times this year -- three times since Sept. 11 -- and the federal government is preparing a short-term fiscal stimulus package of $100 billion.
   Most economists believe the United States has slipped into a recession. Dr. Steb Hipple, professor of Economics at East Tennessee State University, said the recession will be felt most in the goods producing and distribution sectors.
   According to Hipple, retail sales will decline just in time for the holiday season with only children's items and certain basic lines of goods expected to do well.
   One business that has seen an increase in sales since the terrorist attacks is the Army Surplus & Variety store in Mountain City.
   Bill Wallace, owner, said his volume has picked up on several different items, including American flags, gas masks, military supplies, guns and ammunition.
   "Gas masks are getting hard to get. They want a fortune for them nowadays. They were real cheap. I was selling them for about $22 and the ones I was selling for $22 I saw today were $189 bucks. I've got some now I'm selling for $25.
   "Guns and pistols are going well. People are getting their handgun permits," he said. Rifles and home protection guns also are selling steadily.
   Food and clothing sales also seem to be holding steady.
   Dave Williams, assistant manager at Dino's, said business at the restaurant actually increased after Sept. 11.
   "I think a lot of people just want to get together and talk about it. That may be part of it, I'm not sure; or just the uncertain economy. I think maybe a lot of people just didn't want to drive to Johnson City to pay higher prices at the more namebrand places, say like Outback.
   "But our business has definitely been up since then. We hope that it continues through the holidays. We expect it to stay pretty much the same. We have a pretty good customer base," Williams said.
   Stella Guidry, co-manager of Cato, said, that oddly enough, "It seems like it didn't affect us very much, which is good, I guess. But I think too, because we're not in a big city, it doesn't have an effect on people. The farther away you are from something like that, you just kind of think it doesn't affect you.
   "I think our business has stayed the same. So either everybody's still got the money or not worried about the future. We're actually looking forward to a busy Thanksgiving, so hopefully the day after Thanksgiving through the holidays will be just as busy as we've been," Guidry said.
   Sonny Fletcher of Fletcher's A.D. Store in Stoney Creek, which has been in business 76 years, said his sales volume has been about the same.
   "We're in construction up here though, and ours will vary anyway as long as they're building this highway right by (us). But ours has been steady. I haven't noticed any difference."
   Fletcher did, however, say he had noted a decrease in one thing: "I haven't heard those people that was for gun control holler here lately."
   Some areas of the county which already are at an economic disadvantage, have felt an impact.
   "It's been slow," said one Butler retailer. "I think people are afraid to spend their money. It started about three years ago and it has come down steadily. Since 9-11 happened, it's really gone down."
   Other businesses, like Barnes-Boring Hardware in Elizabethton, whose sales tend to fluctuate with the seasons, probably won't be able to assess the impact until after the winter months.
   Jan Peters, co-owner of the hardware along with her husband, Ed, said, "It hasn't hurt us in any way that I know of, but it's hard for me to say because our business is slow in the summer and starts picking up when it gets cold.
   "A store like this, you have slow days and good days. This is a winter store as far as moving your merchandise and having the things that people need. With Sept. 11 happening so close to the time that our season's going to pick up anyhow, I don't see where it has affected us," she said.
   "I know we (she and her husband) discussed it a few days after it happened and we hadn't seen a decline, which a lot of other stores told me they had," she said.
   Like Elizabethton's city manager, Carter County Executive Truman Clark will be keeping careful watch on sales tax revenue throughout the coming months.
   "Sales tax seems to be off a little. It's not off bad enough to get overly concerned at this time. It will take a period of about three to four months to tell, really, through the Christmas season. The revenue can affect the (county) budget just as much as the expenditure side does. That's something we have to watch," Clark said.
   From the city's standpoint, Stahl said, "Our position at this point is a very cautious, conservative approach. We're looking very carefully at revenues, particularly, that will be largely realized from sales tax in the next six weeks."