Long-time local businesses sound off on economic climate change
In the last month, national news has slowly crystallized a dreary environment on Wall Street, a sluggish economy and, most recently, a drop in overall consumer spending, all helping to precipitate a historic low in consumer confidence in the U.S. economy.
According to a consumer research board that posts the Consumer Confidence Index, a survey based on a representative sample of 5,000 U.S. households, consumer confidence now stands at 38.0 out of 100, which is down from 61.4 in September.
“The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers’ confidence,” said Lynn Franco, director of The Conference Board Consumer Research Center in an Oct. 28 press release. “The decline in the Index (-23.4 points) is the third largest in the history of the series, and the lowest reading on record.”
With consumer confidence taking a nosedive not seen since 1973, The Bellingham Business Journal spoke with some of Bellingham’s retailers to find out what they are seeing at their businesses and what they expect to happen next.
Owner of Griffith Furniture
“We’re definitely a little bit off, but not too much. There’s not as much traffic, not as many people driving by. I think everybody is getting used to the bad news and there’s not much we can do about it. But overall its not bad. It could be worse.
“We’ve had some price increases this year but we’re always careful about passing those along. Steel doubled in price and any furniture with springs and steel components has gone up in price.
“I’m hoping there’s a ceiling to this inflation. Our profits aren’t going up and people’s incomes aren’t going up, but prices keep going up. If we didn’t own this building we’d have a tough time paying rent.
“I think it’s better than I expected, though. We’re trying to to cut down our expenses; we’re scaling back on our lighting and heating where possible and trying to use less electricity. But our heating and electric bills keep going up.
“We’ll probably see minimal increases in business for the next year. It will stay pretty flat for a while and people are going to have to get used to it.”
Manager of Avalon Music
“Business these days is just now noticeably slower — just in the last half of October. We’re seeing less foot traffic.
“I’ve been waiting for things to hit Bellingham. Even Bellingham is being hit by the cliché that ‘people are tightening their belts.’
“We’ve always been able to survive slow periods like the dot-com boom. But we’re definitely expecting a slower Christmas season this year.
“I recently had to fire someone for legitimate reasons, but I’m not going to replace them. We hired them on for the back-to-school season, but at this rate we won’t need another person for the Christmas season.
“The economy in general is just going to slow down. The music industry is a dinosaur on its last leg. Music stores will always have a place to survive in the market, but the big record companies have not been able to keep up with industry changes. I think we’ll see at least one of them go under — volume is down so much that it has to happen.
“There’s already such a small percentage of people who actually buy music. But music keeps chugging along. It’s one of those little things that make people feel better and scratch that consumer itch, that need to buy something. A CD or a record is cheaper than a new pair of shoes or a nice TV.”
President of Louis Auto Glass
“There is definitely a dip in sales. It’s pretty much been a snowball effect. People are being more conservative with their finances. Some industries have dropped 40 to 50 percent and we’re down only maybe 10 or 12 percent.
“We’re pretty fortunate to be in the business that we’re in. The good thing about glass is people are going to continue to drive and continue to break their windshields.
“I believe that the companies that have stayed around this long are going to stay around longer. Times like this make people work smarter and more efficiently. I think some of the smaller shops are going to struggle a bit more.
“But things can’t get much worse. It’s going to hit bottom soon.
“I think the economy is going to stabilize. My belief is that there’s going to be a slowdown period but I think we’ve seen the worst already. Things are slowly working but it’s just going to be a matter of time, maybe three to six months. In about a year, things will be better.
“I’m hoping my prediction is true. This isn’t the first crisis in our country. We’ve been in minor recessions before.”
Owner of Lehmann’s Home Appliance Center
“Sales are down but service is up on the other side of that coin. The pendulum swings back and forth. So as we see sales go down, service goes up, we continue to work with people to see what they need. Sometimes they need repair and sometimes it makes more sense to buy something new.
“We work through their scenario and find what’s right for them. Everybody’s scenario is different—that’s why life is never boring.
“Of course we started out hoping to be in a better position but we’re down about 25 percent in dollars and cents over last year.
“Our supplier is beginning to stock less so it can take longer to get some things and fewer things are being carried in stock, but one way or another people need to buy or fix their appliances.
“There is always a need for me in some capacity.”
Owner of Fairhaven Bike & Ski
“Because we do ski, snowboards and bikes, it’s hard to tell how the economy will affect us because winter hasn’t started yet.
“Our bike business is slowing but it is hard to know if it’s just the time of year or the economy. We are about even with last year but all this economy stuff literally just happened and the sense of slowdown has only shown its head in the last two weeks.
“I think people are holding tighter onto money and waiting for some positive news.
“I recently made some change to my buying based on things I always do and that reduced my exposure to the ski market, which has never done well because it’s a seasonal business and some might perceive it as not a necessity.
“Our bike business was way up this year and that is due to high fuel costs directly. Typically, in tough times, people tend to park their car.
“But this whole economy thing is new; I mean, we’re talking about something that only happened three weeks ago. My sense is everyone is extremely cautious and that is creating slowness. I think people want to be positive but they see business people pulling back.
“I don’t think there is any doubt that there is an effect here but the question is whether or not it’s psychological or real.”