Rising jobless claims. Falling factory orders. The stock market diving 82 points in mid-May, then shooting up two weeks later.
Many Americans are trying to figure out whether the five-year expansion is just taking a breather before it sprints ahead or if it’s ready to slip into recession.
“People are trying to budget and make sure they save enough for the future, because it’s so uncertain,” said Kathy Swanby, 42, a Spokane resident who works at Emporium.
Although Emporium shoppers at NorthTown have always been bargain conscious, Swanby said they’ve become more diligent in the past few months about buying only those items on mark-down. Swanby herself - interviewed Thursday while at the downtown library to check out a copy of “Penny Pinching: How to Lower Your Everyday Expenses Without Lowering Your Standard of Living” - is trying to live frugally and clear debts on her three credit cards.
“My goal is to be debt-free in one year,” she said.
Swanby was among a sampling of families and business owners from across the United States who said they’re worried about where the economy is headed. While some optimism remains, two concerns stand out: stagnant wages and job security.
Government reports reflect some pessimism. Growth of the national economy in the first three months of this year slowed to an annual pace of 2.7 percent, slightly more than half the 5.1 percent pace in the final quarter of 1994.
And a recent report showed the index of leading economic indicators declining for the third month in a row. Some analysts consider three consecutive declines in the leading indicators to be a harbinger of recession.
These recent reports have diminished hope for a so-called soft land, where the economy cools off but doesn’t go into decline.
“The best we can hope for is that the slowing economy will come in for a bumpy landing,” said Sung Won Sohn, chief economist at Norwest Corp., a Minneapolis banking company.
Workers and businesses provide anecdotal evidence that show Sohn’s forecast may be correct.
Ron Smith, 36, who manages Chuck’s Transmissions on a truck-clogged industrial strip in Warren, Mich., already is preparing for tougher times.
The family business, which is owned by his mother, did “great” last year. But now, Smith is concerned he might have to cut the hours of his 60 workers to save money.
“When President Clinton took office, it was a free-for-all,” said Mr. Smith, referring to the volume of business he had then. “Now it’s heading back down.”
And in San Francisco, Carol Fritzinger has delayed hiring seasonal workers at the C&G; Roofing company where she is co-owner.
In the recent past, earthquakes, heavy rains and leaky roofs kept the business humming, bringing in $460,000 one year. This year, Fritzinger, 37, predicted business will be off by about $100,000.
“A lot of people are going to do minimal repairs just to get by,” she said, explaining that typical repair bills run between $4,000 and $9,000. “Probably 15 percent of our customers have the money. The balance is from borrowing.”
Fritzinger reflects the sentiments of many in California, where the economy finally appears to be improving but not enough so to be noticed by everyone.
“California is going against the national trend,” said Lynn Reaser, chief economist at First Interstate Bancorp in Los Angeles, noting the state remained in recession when the national recovery began five years ago.
After four years of belt tightening, Oscar Jimenez, a city recreation supervisor in San Francisco, said he’s hopeful about the state’s economy. He recently bought a new metallic blue BMW and, for the first time in three years, took a vacation with his wife to the Grand Canyon.
“We’ve been frugal for the last two to three years,” said Jimenez, 42, who has a household income of about $85,000. “So now, you do something for yourself.”
In Spokane and Coeur d’Alene, economic spirits have been high for the last five years. The Inland Northwest ignored the last recession as population and job growth fueled the strongest economic expansion since the 1970s.
Signs of a slowdown have emerged, particularly in the housing markets, but few are concerned about a recession locally, regardless of what happens to the national economy.
“It’s slowing just a little bit out there,” said 24-year-old Patty Muhlhauser of Coeur d’Alene, who sells real estate while taking care of her three daughters at home. “But not too much. I’ve been very busy in what I’m doing.”
Though the area’s real estate market has dropped noticeably off last year’s record pace, Muhlhauser is selling plenty of homes and a lot more vacant lots than before. “Things have definitely picked up in the last few years and it’s still going strong.”
Nationwide, the slowdown is claiming some jobs: The Labor Department’s report on unemployment earlier this month showed that 101,000 jobs were lost in May, the biggest setback since the nation was pulling out of the last recession in April 1991.
But, there are positive signs. Interest rates are falling, after rising most of this year.
This helps the housing and autos industries, which together represent 30 percent of the nation’s economy. Home sales stimulate demand for furniture and appliances. And auto manufacturers are big buyers of steel, plastic and leather.
Watch auto sales for a clue as to what direction the economy will go.
Craig Rogers of Atlanta drives a 1987 Volkswagen and has put off buying a new car.
The 34-year-old is the sales manager in an upscale men’s clothing store that is part of a national chain. He said the company has cut salaries but raised commission percentages to pressure him to sell more clothes.
“The market is going down,” said Rogers, noting that his $35,000-a-year salary was cut about 20 percent. But he is holding onto the job; the store is not replacing workers who leave.
If consumers like Rogers regain enough confidence to make purchases that could shore up a key sector of the economy.
But consumer confidence is waning, according to The Conference Board’s widely watched survey.
With many people feeling they never fully recovered from the corporate restructurings and big layoffs that marked the last recession, the prospect of another one is unsettling. The nation does not need more struggling lower- and middle-class workers, people say.
Spokane resident Darrell Wallis, 62, worries that a recession will widen the already formidable gap between the rich and poor.
“In my lifetime it’s gotten worse and worse, and whenever a recession hits, the two classes get even further away. The rich get richer, and the lower classes hurt,” he said. “That’s what I worry about.”
, DataTimes ILLUSTRATION: Graphic: Consumer confidence
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