Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, March 10, 1991 TAG: 9103090238
SECTION: BUSINESS PAGE: B-1 EDITION: METRO
SOURCE: DANIEL HOWES BUSINESS WRITER
DATELINE: LENGTH: Long
Roanoke's unemployment rate remains one of the lowest in the state; several downtown construction projects are in full swing; regional consumer confidence is one of the highest in the country and home and auto sales are edging upward while declining elsewhere.
"We haven't had the big bubbles on the upside and we're not going to have them on the downside," said Lindsey Quesenberry, a vice president at J.C. Bradford Co., a downtown Roanoke stock broker.
Yet there's surprise that barely 10 days after the Persian Gulf War cease-fire, Roanoke Valley consumers seem more confident, more willing to part with precious dollars.
Realtors and car dealers say folks who browsed throughout the uncertain fall and 42-day war are now buying, boosting sales during a traditionally slow selling season. Likewise, retailers are seeing increased traffic through their stores.
"We sold more cars in the first three days of this month than in the first 20 days of last month," said Paul McCauley, general manager of Rick Woodson Honda on Peters Creek Road in Roanoke. "I was worried about having too many cars. Now I'm worried about not having enough."
Real estate agents for Roanoke-based Boone & Co. were "busy as the devil" in February, general manager Tim Garrison said. Buyers apparently have succumbed to low interest rates and depressed market prices.
"All of a sudden people are starting to sign contracts and I think it's a function of the war situation," said R. Lee Mastin, a partner in Mastin Kirkland Bolling Inc. of Roanoke. Still, February home sales were off markedly from the same time last year - 178 last month compared to 380 the year before - though 1990 was headed for a record year until Saddam Hussein invaded Kuwait, oil prices skyrocketed and the economy tipped into recession.
But triumphs in the desert and the accompanying euphoria at home do not necessarily herald the beginning of an economic recovery. The recession remains, and its effects are deceptive.
Many may find it hard to discern the recession - what with low interest rates, comparatively low unemployment and inflation and depressed prices on many goods.
Rest assured, it's there, warned Alan Gayle, economist for Crestar Bank in Richmond. The bite probably has come in other ways.
Businesses pinched by declining demand or rising costs may not opt for layoffs. Instead, executives may elect to not fill vacancies and give workers raises that won't keep pace with inflation or freeze salaries. Company contributions to pension plans have been cut and travel and professional development budgets are slashed.
Any of this sounding familiar?
"If you keep your job you will not get as large a raise - and you'll know it," Gayle said. "Most people don't lose their jobs in a recession, but it's the exception if you don't know the slowdown is here."
Worse, the collective memory of economic hard times is faded at best; for many, it's non-existent. Virginia lost less than 1 percent of its work force to layoffs and shutdowns in the 1981-82 recession, he said, while the national economy lost 3.1 percent.
"The pain that we have experienced is minimal," Gayle said. "I dare say there are a lot of managers out there who have not seen a recession in their working lives and they don't know what one looks like."
No doubt some feel secure enough to make new financial commitments in uncertain times. Take Dale and Suzanne Gaff. They bought a year-old car last month and spent a rainy Sunday earlier this month looking at houses.
"We don't want to let the economy get the best of us," said Suzanne Gaff, a graphic artist. "I feel better about things, as far as the economy is concerned, than I did two months ago," said Dale Gaff, a landscape architect. They haven't put their house in Salem on the market yet, but the Gaffs want more living and studio space. Combine their needs with the lowest mortgage interest rates in a decade and the result is enough to put them back in the real estate market.
Or consider Randy and Carolyn Miller, who have spent the past month looking for a new car, virtually unconcerned with issues of war and peace, boom and bust.
"I know it's a good time to buy a car," Randy Miller, an installer for C&P Telephone, said, surrounded by a sea of new Honda Accords in a dealer's lot. "I don't know of anyone that has cut back [their spending] a great amount because of the so-called recession. We get our check every week just like we have for 18 years."
For now, the Millers can count themselves among the fortunate. They don't fear losing their jobs in a soft economy: After all, they're the part of the growing army of American workers devoted to a society craving information and obsessed with its own health.
Carolyn Miller, a nursing assistant at Lewis-Gale Clinic, uses store layaway plans and is a member of the Christmas club at work. Come the holidays, she has cash for gifts and doesn't saddle the family with debt for the new year.
The Gaffs and the Millers highlight a curious fact about recessions: some don't seem to feel the pain at all, especially with a comparatively low "misery index" - the sum total of inflation and unemployment rates. No longer do the slowdowns hit only the assembly-line workers and undereducated, bypassing college-educated managers, even the executive suite.
Now, the pain is woven through an economy less segmented than in past years. Increasingly, white collar, well-educated, experienced workers are feeling threatened. Public employees are finding out that annual raises are not guaranteed, and that furloughs and layoffs are possible.
Others suffer as sliding lower interest rates lure more would-be home buyers into a sluggish market. Interest rates lowered to jump start the economy by spurring lending and investment pinch elderly people who depend on investment income to pay the bills.
Indeed, a few dollars may be the only thing that stands between comfort and insecurity for retirees living on fixed incomes. Roanoke County resident Libby Andrews, 65, saw $150 in monthly income disappear when the interest rate on one of her mutual funds was cut two percentage points, from 10 percent to 8 percent.
Recent declines in investment income are driving increasing numbers of retired persons to visit financial advisors, such as J.C. Bradford's Quesenberry.
"People are looking for alternative investments that might make their cash flow go up," he said. "Inflation has not changed markedly while interest rates have come down."
So folks like Andrews are feeling squeezed. Utility bills have not shrunk; neither have mortgages nor health insurance premiums.
There are others.
Bonnie Snavely, 36, doesn't think she'll ever be able to buy a house - whatever the interest rates. An employee at the Lynchburg-area Agency on Aging, Snavely is almost certain she won't see a raise this year. The federal, state and local governments that support her agency are battling rising costs, sinking revenues and widespread anti-tax sentiment.
"When you know we're in a recession - on top of going to war - it's all the more reason to be cautious," said Snavely, who is single and feels forced to share a house so she can meet all her expenses and have a few dollars left for herself.
J.B. Johnson, a valley insulation installer, can see and feel the recession - his business has all but dried up and the 1982 Pontiac TransAm he's been trying to sell hasn't attracted one inquiry.
"Biggest change I seen was in home building. It really went down," he said, taking a break from looking at pickup trucks at Dominion Car Co. in Salem. "This time last year I was booming. I went ahead and added to my house. I said, `If it gets me, it gets me.' "
Now, "If it wasn't my wife working, I'd be out flipping hamburgers. It's tough."
by CNB