While Queens residents and businesses have been monitoring the status of the financial markets hourly through their computers, cell phones and TV, the long-term impact of the economic downturn is still unclear. However, families and businesses are already beginning to see the affects firsthand whether it is eating out less, worrying about their shrinking retirement funds or buying more items in bulk at a lower cost.
Frank Macchio, who has run the general contractor Construction Services Co. in Whitestone for the past 20 years, is seeing the impact of the downward spiraling economy firsthand. Macchio recently had to lay off eight of his 15 employees - some who have been with the company for nearly 10 years - and although he recalled a lull in work during the early 1990s, this is the worst he’s seen.
“The shortage of work came quickly, but credit lines and flexibility remained open; it allowed you to borrow money to maintain yourself during lean times,” Macchio said. “The difference today is there is still work out there but no financing to do it.”
During the recent credit crunch, Macchio said that despite his excellent payment history, he saw his credit line slashed by nearly 50 percent from $100,000 to $50,000, and he believes that if that credit line were not open, it would have been eliminated.
On Tuesday, October 7, the Federal Reserve took another step it hopes will jumpstart the credit market when it announced that it would buy up “commercial paper” or the short-term debt used to fund a company’s day-to-day business operations.
“I’m glad that the Fed is doing whatever it can to buy short-term commercial debt to get our credit markets moving and give businesses the funds they need to meet payrolls and update inventory,” said Queens Congressmember Carolyn Maloney, who is Chair of the House Financial Services Committee’s Financial Institutions Subcommittee. “I commend Chairman Bernanke for taking this step to fight the credit crisis that’s roiling markets both here in America and around the world.”
While businesses throughout the borough are having difficulties meeting payroll and finding access to capital, two areas that might be seeing an increase in customers are the thrift shops and resale stores throughout the borough.
“There is no question people are trying to stretch their dollars and looking for ways to do that,” said Alfred Vanderbilt, a spokesperson for Goodwill, which has a store on Steinway Street in Astoria. Vanderbilt said that during the past month, Goodwill has seen about a five percent increase in sales nationally, while donations have only seen a slight decrease during that time.
However, Vanderbilt acknowledged that if the difficult economic times persist, the organization might see some donations decline with people trying to keep items for a longer period that they may have donated during better economic times.
“It probably won’t impact us that much because in the hard times people tend to rely more on Goodwill as a place to shop,” Vanderbilt said. “We’re almost recession proof as a business, it’s quite remarkable.”
Meanwhile, U.S. Senator Chuck Schumer unveiled a plan over the weekend to help students and families receive loans for college during the credit crunch. Schumer’s plan involves encouraging all colleges to accept direct government loans, monitoring the rescue plan to make sure the student loan market is protected and forming a commission that would ensure government loans would be made available if the private loan market collapses.
“With all types of credit tightening up, we need to ensure that families and students can get the loans they need to pay for college,” Schumer said. “If even one high school grad has to forgo college because they can’t get the loans they need to pay for it would be a great casualty of this economic crisis.”
After voting down a bailout plan early last week, Congress returned to session and hammered out a $700 billion bailout plan that the president quickly signed into law.
“I’m hopeful that this will start to restore some confidence to the market and start to unlock the credit market,” said City Comptroller William Thompson, shortly after the federal government announced the plan.
Queens feeling economic crunch
By Pete Davis
Posted on
