There's no question the Sept. 11 attacks have touched Greater Cincinnati's economy, but the degree and reach of the impact remains fuzzy.

        Some results are obvious and immediate. Delta Air Lines and GE Aircraft Engines, for example, will soon cut 1,600 local jobs between them. Downtown hotels and restaurants are feeling the pinch of sparsely attended conventions.

        But the most noticeable change across all sectors has been an unprecedented caution — a reluctance to make decisions while troops carry out attacks abroad and the U.S. girds for more terrorism at home.

        This caution punctuates an already dismal year for Cincinnati businesses: a slowing economy, an 89-day Comair pilots strike, April's riots and a lackluster convention and tourism business.

        Consumers control the economy's fate, accounting for two-thirds of economic activity, economists say, so high-profile layoff announcements could sap confidence.

        Statistics released Friday didn't shed much light on how Cincinnati is faring since the attacks.

        September unemployment in Hamilton County increased to 4 percent from 3.7 percent in August, but the data doesn't indicate last month's impact because it was gathered during the week of the attacks.

        “The crystal ball is fuzzier this year than in previous years,” said Steve Lydy, vice president of business development for Baker Concrete Construction Inc. in Monroe.

        “We're guarded in any forecast. It is the most un certain time in my 30-year business career.”

        Baker, which employs 100 locally, is scrutinizing its budget for next year. The concrete contractor, which bids on construction jobs nationwide, is trying to gauge how last month's events will affect 2002.

        In August, Baker's agenda was busy with airport expansions. Leisure and business

        travelers clogged the nation's runways, prompting airports to tackle environmental studies to determine the feasibility of such expansions.

        Now some experts say it can take up to three years for airlines to recover from terrorist-induced anxiety, and Mr. Lydy wonders if the industry's woes will delay expansions such as the one planned at Cincinnati/Northern Kentucky International Airport.

        But as some projects are pushed from definite to maybe, Mr. Lydy said other work becomes more likely.

        The federal government has promised to pull out its checkbook to bolster the nation's security. Possible jobs include reinforcing military bases.

        What is most troubling for Mr. Lydy is the caution that seems to have blanketed the economy.

        “People are in a wait-and-see mode to see what happens over the next three months,” Mr. Lydy said. “We're cautiously optimistic that this is still a very strong economy. People are still planning. I get very concerned when I see that people are no longer planning.”        

Indecision hurts real estate

        Nobody knows this caution better than commercial real estate agents. They've been left with large new office buildings and warehouses, but few businesses willing to take a look, let alone lease space.

        “Nobody is making any decisions,” said Arthur Calamari, a broker trying to lease the Summit Woods complex in Sharonville. “Before, they wouldn't have hesitated. It's brutal right now.”

        Businesses don't want to commit to large offices for several years without first getting a better idea of future business prospects.

        The result has been a steady increase in vacant new office and warehouse space, planned during boom times but built as the economy slowed.

        To combat the growing glut of space, landlords are resorting to incentives like a free year's rent for a long-term lease.

        Yet Cincinnati's real estate market is in better shape than San Francisco, Austin and other cities hit hard by the technology bust.

        The uncertainty has spread to commercial lending, even though repeated interest rate cuts by the Federal Reserve have made borrowing cheaper.

        “We have seen a continuing weakening since the first of the year,” said Stephen Schrantz, executive vice president of commercial banking at Cincinnati-based Fifth Third Bank. “It has not been dramatic or precipitous, but a general malaise.”

        There were signs of improvement before Sept. 11, particularly for Cincinnati's manufacturing sector.

        Companies began to sell extra inventory, a necessary step before hiring more workers and increasing production. New orders were on the rise.

        Then the terrorist strikes effectively snuffed out any immediate rebound. The region's largest manufacturer, GEAE, hasn't been alone in cutting jobs. Milacron, Ford and Hillshire Farm & Kahn's announced more than 800 layoffs.

        “Now, everybody is frozen in place to see what happens,” said James Brock, a Miami University economist. “Every economic measure is going to go haywire as a result of this.”        

Auto dealers woo consumers

        Economists say consumers are the key. If they buy goods, the economy will chug along.

        Car dealers have launched ag gressive sales pitches offering new vehicles at zero interest. Cincinnati-area car and truck dealers hope the promotions turn around a lackluster year in which sales, through July, trailed last year's pace by 3.2 percent.

        Overall, sales tax receipts show not all areas of the Tristate feel the slowdown evenly.

        Sales in Hamilton, Butler, Warren and Clermont counties through July declined less than 1 percent from last year.

        But a closer look shows Hamilton County was the only one to report a decline in taxable sales, down 3.3 percent.

        Nearby Butler, Clermont and Warren counties all gained sales this year — with Warren County's 9.3 percent increase the largest.

        Specific figures for Northern Kentucky were not available, but sales in the entire state are 5.1 percent ahead of last year.

        A possible explanation is Hamilton County has more regional shopping attractions. So as consumers tighten belts, they make fewer trips to restaurants and malls.

        Other reasons include April's riots and a slowing convention and tourism business. Fewer visitors are shopping at downtown restaurants and booking hotel rooms.

        The Greater Cincinnati Chamber of Commerce last week mailed letters and sent e-mails to members encouraging them to hold conventions in Cincinnati or the suburbs.

        Chamber and convention officials fear some of the region's 80,000 hospitality jobs are at risk.        

Housing nears record sales

        A bright spot of the local economy has been the housing market.

        Home sales in Southwest Ohio, Northern Kentucky and southeastern Indiana jumped 4.1 percent in August. The region is on pace to beat its record-setting year of 1999.

        Consumers also have taken advantage of low mortgage rates to refinance loans or take out home equity loans to pay off other debt.

        “Low interest rate clearly are viewed as a positive for the consumer,” said George Vredeveld, a University of Cincinnati economist.

        But Mr. Vredeveld said it's tough to depend on consumers to bail out the economy if companies keep trimming jobs.

        “It is clear consumer confidence becomes inversely related to employment,” Mr. Vredeveld said.

        The employment picture may not get any rosier soon.

        Richard Stevie, chairman of the Greater Cincinnati Chamber of Commerce's economic advisory board, revised job growth estimates for the Cincinnati area after the air attacks.

        He dropped an original prediction of .9 percent job growth in 2002 to .1 or .2 percent growth.

        GE's cutbacks will ripple through the economy. Also, the troubled airline industry could cut into the area's strong distribution job base.

        “Uncertainty causes businesses to be more conservative and retrench, which means layoffs,” said Mr. Stevie, an economist at Cinergy Corp.

        That means it will be difficult for people like Johnee Dunaway of Anderson to find work.

        Ms. Dunaway, laid off as a travel agent and clerical worker at Carson Wagonlit Travel after the terrorist attacks, said she needs to curtail spending until she gains employment.

        She has been busy filing an unemployment claim and searching for work. But so far, she hasn't found a new job.

        “I guess a lot of other people are in the same boat,” Ms. Dunaway said.

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