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Businesses hope holiday restores confidence

By: Shelley Capozzoli
Editor in Chief

Across the country, four in ten Americans cut spending after the September 11 terrorist attacks, according to a Gallup-CNN poll. Now, nearly two months later, the nation's economy, along with retailers, are still feeling the slump.

The majority of this decrease in sales is due to a lack of consumer confidence. The Conference Board's Consumer Confidence Index fell 11.5 points in October, and the drop is the largest since the Gulf War in 1990, though the index is much higher than it was at that period.

During a time of uncertainty and confusion, most consumers just haven't felt the need to buy anything but essentials. Mr. Brian Woodward, government and economics teacher explained, "Any time you have an event that shakes that confidence, like economic downturn, people are afraid to buy." Also, according to the World Markets Research Centre website, making sacrifices and supporting the war doesn't exactly encourage more shopping at the mall.

Instead, shoppers are buying basics, like groceries, and fewer larger purchases like cars, major appliances, or furniture, according to workopolis.com. The website also said that department stores and the apparel industry will be hurt because they sell nonessentials.

Though much of the nation's business seems to be suffering, the Millcreek Mall reports that they haven't experienced a dramatic drop in sales. Marketing Director of the Millcreek Mall, Matt Boartes, said that since the attacks, it appears that business has been positive. Though the sales report for September is not in yet, he said he's actually noticed an increase of shoppers.

For those retailers that are suffering, what have they done to revive sluggish sales? Most have been forced to slash prices. The economy website, www.dismal.com, reported that the holiday season will be full of bargains for shoppers, but will also be "a harsh blow for corporate profits." Some retailers have also had to cut back on advertising spending, and trim costs of inventory, according to workopolis.com.

"The auto industry is a great example," said Woodward. He noted that dealers are giving several incentives to get people to buy cars, like no interest loan programs, high priced trade-ins, and extended warranties.

According to www.nandotimes.com, a news website, the government is helping to restore business confidence by agreeing to bail out certain industries, like the airlines, who have suffered layoffs. Congress and President Bush have approved $15 billion for the nation's airlines, with more aid expected.

However, the terrorist attacks are not solely responsible for the declining economy. The nation's economy was due for a recession. The consumer confidence had been declining for four consecutive months. "We had ten years of unprecedented growth," Woodward reminded. "It's not just because of terrorists...it's just a natural part of the cycle."

So what can consumers do? If you are considering making purchases, Woodward advises to make them now: "Take advantage of the incentives that are being offered."