SARS could deliver a devastating blow to the already sputtering U.S. economy, experts predict.
The Federal Reserve Bank, in this week’s Beige Book, cited the potentially lethal Severe Acute Respiratory Syndrome as a major factor in stalling the country’s economic recovery.
Worst hit, the Fed’s periodic survey noted, have been tourism and international travel.
Backing the Beige Book’s grim findings are eye-popping statistics released this week by the Air Transport Association, which found that revenue passenger miles for the week ending on April 20 were down 10.5 percent over the same period a year ago.
Air travel to Pacific destinations plummeted 39.6 percent, while transatlantic travel dropped 25.8 percent – with ATA president James May citing “the weak economy and concerns over SARS” for the slump.
And the situation is expected to deteriorate even further and spread to other industries.
“SARS clearly has the potential for far greater impact than anything we have faced before,” said John Challenger, executive director of Challenger, Gray and Christmas, a consulting firm that tracks layoffs.
“Companies that have dealings in any of the countries affected by SARS are basically in a lose-lose situation,” he noted.
“If they decide to postpone travel, they could lose valuable business” and “may be forced to cut payroll.”
And if they don’t put off travel, he said, “they may have to quarantine [employees] upon their return, thus losing their output for at least 10 days . . . the quarantine time recommended by the Centers for Disease Control.”
Also impacted are U.S. factories that depend on buying parts and other supplies from companies in SARS-stricken countries, he said. They may be forced to cut jobs, he noted.
Challenger pointed out that an electronics industry research firm recently reported that half of all the electronics parts manufactured in Asia are transported to the U.S. on passenger jets – which now face cuts because of SARS.