by Cedric Muhammad
BlackElectorate.com

(FinalCall.com)--The Sept. 17 reopening of Wall Street, only 6 days after the World Trade Centers were destroyed by a terrorist attack, was viewed by many as a triumphant return to business and a morale boost to the country. But by Friday afternoon, Sept. 21, the symbolism had given way to substance, as Wall Street endured its worst week in 68 years and the worst ever when measured in terms of the total loss of paper wealth.

In only five days of trading, over $1.4 trillion in asset value was destroyed as the Dow Jones Industrial Average fell by 14 percent to close at 8235.81 on Sept. 21, while the NASDAQ lost 16 percent of its value, falling to 1423.19 at close of market trading Sept. 21.

The stock market fall, most observers believe, was the result of the combination of fears regarding an imminent military response by the United States for the attacks, and a dramatic increase in accumulating evidence that the U.S. economy is in the most serious trouble in a decade. As if it were not enough for market participants to weigh the economic ramifications of the United States heading for war, they also had to carry the burden of receiving the news, since the September 11 attack, that U.S. corporations had laid off 115,000 workers.

Some analysts, so alarmed by the dramatic increase in layoffs�which primarily took place in the technology, aerospace, travel and airline sectors of the economy�began to revise their unemployment forecasts, believing that the nation�s unemployment rate may skyrocket from its current level of 4.9 percent to 8 percent by the summer of 2002.

The market fall and layoff spike also gave fertile ground to serious discussion that the United States economy is entering into a recession which is officially defined as two consecutive quarters of negative economic growth. For many, the question was not whether the United States economy would be in a recession by year�s end, but rather how long that recession would be. The estimates varied, with some believing the economy could rebound by next spring while others maintained that the country would be mired in a serious economic downturn for two years.

A few economists argue that the U.S. economy would expand during a war, due to increased manufacturing and construction aimed at rebuilding New York�s devastated financial center and increasing the nations weapons supply. But most economists say that capital and labor deployed to rebuild, secure and rearm America in a war on terrorism is nothing like the national effort, during World War II, which resulted in an economic boom when the country devoted its considerable resources to the manufacturing of armaments in a two-front war against Japan and Germany.

Economists say the U.S. economy no longer has a manufacturing base. Today, the economy revolves around technology and service industries. These analysts believe that war impacts a technology and service economy differently than one that is dependent upon manufacturing. And because the technology sector depends upon high-risk capital, and service industries like airlines and tourism depend upon an environment of safety, both of which have been diminished in this volatile and dangerous period, the economy would probably be negatively affected by war.

In response to the economic ramifications of the attacks, President Bush and the Congress began working feverishly on an economic stimulus package designed to not only jump-start the ailing U.S. economy and financial markets, but also to prop up the now-struggling U.S. aviation sector. Shortly after the attack, a $40 billion spending appropriation, referred to as a down-payment on the early stages of a military build-up as well as the financial and structural damage caused by the attack, was quickly approved. In addition, early in the week Congress and the President openly discussed the possibility of corporate, capital-gains and payroll tax cuts and increased spending projects as part of a bipartisan stimulus package designed to strengthen corporate earnings; encourage investment in the stock market; increase capital spending on equipment and research and development by businesses; and to foster an increase in personal consumption by individual consumers.

But the markets continued to tank as these discussions took place, recognizing that it may be some time before a deal was worked out by politicians on both sides of the aisle. And by week�s end, the dire circumstances of the airline industry took precedence over any macroeconomic concerns, as lawmakers, late Sept. 21, approved a $15 billion airline bailout that will not only provide $10 billion in federal loan guarantees and $5 billion in direct grants to the ailing industry, but will also absolve all airlines of any liability for property damage claims resulting from the hijackings and resulting crashes.

Considering that many in the Black community, more than their white counterparts, depend upon manual labor and part-time work for the bulk of their income, conditions are ripe for the Black community to be disproportionately affected by the country�s downturn. Even before the attack, such a trend had begun to emerge.

In April, few noticed that the unemployment rate held steady for white America at 3.7 percent, while it shot up by over a full percentage point for Blacks, from 7.5 percent to 8.6 percent. As of last August, the Black unemployment rate had climbed upward to 9.4 percent while it crawled to 4.2 percent for whites. When the incarceration rate of Blacks is considered (a factor not weighed by the Department of Labor), the unemployment rate for Blacks is actually over 11 percent. While it is still too early to be sure of the effect that the World Trade Center and Pentagon attacks will have on the Black economy, it is likely that an acceleration in the Black unemployment rate will intensify as the U.S. manufacturing sector continues to deteriorate and more part-time jobs in the hotel and tourism industry, filled by Blacks during the Clinton economic boom, are extinguished due to decreased earnings in the tourism sector.

But Black laborers have certainly not been alone in feeling the worst of the American economic downturn. The Black publicly-traded firms have been pounded by the stock market�s decline losing almost one-half of their market capitalization (their stock price multiplied by the number of shares outstanding) as their stock prices have plummeted.

Radio One (ROIA) has seen its stock price fall to $10.90 at the Sept. 21 close from a 52-week high of $23.38. Granite Broadcasting�s (GBTVK) stock price currently languishes at $1.28, down from a 52-week high of $6.62. And OAO Technology (OAOT) stock has fallen to a paltry 95 cents, from a yearly high of $4.37. In an environment that makes investors increasingly risk-averse, the prospects of the Black publicly-traded firms, which represent some of the smallest companies in the entire market, do not look good as investors pull their money out of risky investments and into more traditionally stable vehicles like blue chip stocks, bonds or gold.

The future of the U.S. economy and the world�s financial markets may very well hang on the prospects of war. Until that storm cloud is removed, it is very likely that the U.S. and the world are headed for a global recession that may plunge Black America deep into economic depression.