Baltimore businesses, tourism hardest hit areas after riots
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NEW YORK, April 29 ― A night of arson and looting in Baltimore has shaken the confidence of people running businesses beyond the areas hardest hit. In particular, they are concerned a city that took many years to start to recover from devastating riots in 1968 could be put back on its heels.
While Baltimore's unemployment rate is higher than the national average and it is lagging in per capita income, the city government's budget is stable, it has a diverse business sector, elite universities and medical facilities, and a growing number of tourists flock to its downtown harbour.
But the unrest that led to the burning of 19 buildings, the destruction of 144 vehicles, and injuries to 20 police officers on Monday, deeply unsettled the business community and the wider population of the city. It followed the funeral of a 25-year-old black man, Freddie Gray, who died in a hospital on April 19, a week after sustaining injuries in police custody. The situation was calmer yesterday, with the National Guard deployed and a curfew in force from 10pm to 5am, but tensions remain very high.
“I woke up this morning feeling really concerned about the future of our industry in Baltimore and whether people will want to move here and live here,” said Will Runnebaum, owner of Baltimore's Marcus-Boyd Realty.
“In the last couple of days we've had to cancel numerous appointments with clients that were interested in seeing properties for sale and for rent,” Runnebaum said.
With the one-week curfew imposed, service-oriented businesses such as restaurants are taking a hit. They started to suffer some days ago as protests grew following Gray's death.
“We started to feel the impact of the events taking place as early as Saturday, with cancellations of parties that were booked for events,” said Brian McComas, the owner of Ryleigh's Oyster restaurant which has several Baltimore locations and has temporarily closed one.
Baltimore is home to some major American businesses, including fund management firms T Rowe Price and Legg Mason, and athletic wear retailer Under Armour. T. Rowe Price closed its downtown office on Tuesday. Legg Mason opened its offices but encouraged employees to work from home.
The city's conference industry could also take a hit. The Futures Industry Association said it canceled a compliance conference scheduled for Wednesday, and some other events have been canceled or postponed.
“It's going to be harder to attract convention and business meetings to Baltimore,” said Anirban Basu, Chairman and CEO of Sage Policy Group, a Baltimore-based economic and policy consulting firm. “The community, region and state will all be negatively impacted. Private investment into Baltimore will slow.”
The looting and burning of a CVS pharmacy and general store, which has been shown on just about every newscast in the past 24 hours, as well as the destruction of other shops, will tend to deter retailers from making new investments, economists warned.
“One of the things that's been growing in the area has been the tourism aspect and nothing puts off tourists more than riots and curfews,” said Daraius Irani, chief economist at the Regional Economic and Studies Institute of Towson University in Baltimore.
In Baltimore's favour is a “healthy financial position” according to a July 2014 assessment from credit rating agency Moody's, while rival Standard & Poor's says the city has strong budgetary flexibility and strong liquidity.
“One of Baltimore's credit strengths is it has a sizeable and diverse tax base,” said Moody's analyst Jennifer Diercksen, noting the city's universities, which provide thousands of very safe jobs ― creating a stable base for Baltimore.
Much like Boston and Philadelphia, Baltimore's economy has been anchored by elite universities, such as Johns Hopkins and the University of Maryland School of Medicine.
Still, the city lags the rest of the nation on a per capita income basis. Its per capita income was US$24,155 (RM85, 878) for 2012, representing only 86.1 per cent of the national median, according to Moody's.
Its unemployment rate is higher than the US average ― according to the US Bureau of Labor Statistics, Baltimore city's unemployment rate in February was 8.4 per cent versus the US rate of 5.8 per cent in that month.
Demographics have worked against it ― the city shrank from nearly 950,000 in the 1950s to around 620,000 today. That has been turning around in recent years, with a modest rise of 0.3 per cent between 2010-2014.
Still, economists said one of Baltimore's problems is the sharp demographic split between the successful elite and an underprivileged population.
“There is the vibrant, beautiful, urban community that is characterized by ongoing renaissance, and the poor, less educated, less visited, which faces more challenges,” said Basu. “Both Baltimores have been making progress in recent years.
“Despite the fact the destruction was in the other Baltimore, not the one visited by tourists, the damage economically in the near and mid term will affect both.” ― Reuters