From Hawaii to Rhode Island, Crash’s Impact Is Felt
Undated (AP) _ The stock market’s collapse has been felt from Hawaii to Rhode Island, by cotton farmers, builders and bankers.
The Oct. 19 plunge in stock prices wiped out more than half a trillion dollars of paper wealth, and some people admit to big losses.
But the stock market panic is just one more factor affecting an economy whose different regions respond to forces as diverse as oil prices, droughts and good surf.
There will be big losers, like Wall Street; smaller losers, like jewelers; and even some winners, like Ron Orr of Fort Worth, Texas, who sells stock quotation systems.
″Business has mushroomed. It’s really blown some wind into our sales,″ said Orr, who says his systems are popular because they give more up-to-date prices when markets are fluctuating wildly.
A recession, if it struck, would be nothing new for states like Louisiana that are already reeling from the decline of oil drilling in the Gulf of Mexico.
But the booming East Coast is already feeling the bite. New York City Mayor Edward Koch declared a temporary hiring freeze this past week, saying the city’s tax revenue would shrink because of the damage to financial services companies.
A Wall Street Journal-NBC News poll published Friday said 22 percent of Americans thought a major economic downturn was ″very likely″ in the next 12 months, and an additional 42 percent thought it somewhat likely.
Most likely to be concerned, undoubtedly, are the unfortunate people who bought high and sold low.
A telephone receptionist in Honolulu says her family lost $50,000 in stock futures.
In Providence, R.I., a story is circulating about a man who put up his house for a $100,000 loan, put all the money into stocks and used the stocks as collateral to buy more stocks - right before the market collapsed.
The cotton harvest is good this fall in western Texas, and that took the sting out of stock market losses for J.B. Cooper, a 60-year-old farmer of cotton, grain sorghum and wheat in Roscoe.
″Maybe this thing is a blessing in disguise,″ Cooper said. ″We were on a collision course. This thing is going to awaken us, maybe, hopefully. It’s not the event that matters, it’s how you react to it.″
In Hawaii, fears that the wealth evaporation could hurt tourism led the Hawaii Visitors Bureau to form a special monitoring group that includes representatives of hotels, airlines and travel companies.
Florida officials, meanwhile, are hoping a downturn will prompt vacationers to visit their state instead of, say, Hawaii, said Stephen Morrell, senior regional economist for Southeast Bank in Miami.
In St. Louis, there are worries that federal budget cuts prompted by the stock panic might hurt locally based defense contractors like General Dynamics Corp. and McDonnell Douglas Corp.
Cattle ranchers are concerned that a recession might cause people to eat less red meat, and the price of contracts for future delivery of livestock has fallen about 20 percent since the stock collapse.
But prices for other agricultural commodities, such as grain, have held up well.
″Out here in heartland America, I don’t think there’s any impact from the standpoint of agribusiness,″ said Walter Casey, a spokesman for Conagra Inc. of Omaha, Neb.
The silver lining of the stock collapse is a sharp decline in interest rates, but so far the lower yields on Treasury bonds have not translated into lower mortgage rates.
″I’m hoping that by next week we’ll be seeing some changes,″ said Phil Wright, who runs a real-estate brokerage firm in the western suburbs of Portland, Ore., and says 30-year fixed mortgages remain stuck at 11 percent or more.
Wall Street is a continent away to Alaskans, where a bigger worry is low oil prices.
″Alaska just traditionally has a boom and bust economy. Five years ago we had more money than we knew what do with and now we don’t have any,″ said Lin Stafford, an information specialist for the Anchorage Chamber of Commerce.
In Sweetwater, Texas, ″It’s been mostly a source of conversation. It tends to create a feeling of anxiety,″ said Byron Calcote, president of Texas Bank and Trust Co.
″Some people had retirement money that shouldn’t have been in risky things,″ Calcote said. ″They’ve got to wait for it to come back (in price) because they’re a third underwater now.″
The stock collapse may cut into consumer spending, but the evidence so far is not conclusive. Bennington Potters Inc. of Bennington, Vt., did more business the week of the panic than it did a year earlier, said David Gil, the president.
Likewise, construction is usually an early victim of an economic slump, but builders of big projects have seen little impact so far.
″People are talking about it and eyebrows are being raised, but no plans are being canceled,″ said Paul Choquette, president of Gilbane Building Co., of Providence, R.I., the nation’s 15th-largest contractor.
″It would be kind of foolish to scrap (a long-term project) for what we all see as a short-term blip in the stock market,″ he said.
What bothers Fred Broad of Milwaukee, Wis., is the way the stock market collapse dragged down the stock of all companies, even ones in healthy industries.
″It’s been a good year for us,″ said Broad, executive vice president of the Construction Equipment Manufacturers Association, which represents companies such as Caterpillar Inc. and Deere & Co.
Personally, Broad said, ″I haven’t lost a nickel because I haven’t had to sell.″