After layoffs and plant closings, area business leaders now have calmer outlook on economy

Steve Vitale assists with the distribution of frozen chicken and commodity food Friday at Christ Episcopal Church. The use of food banks has gone up with the recession; national food bank surveys put Missouri in the top 10 for demand. (Fred Lynch) [Click to enlarge] [Order this photo]

Left in the wake are thousands of unemployed Southeast Missourians, as well as hundreds more who lost their homes to foreclosure or sought the protection of federal bankruptcy courts. Many more changed jobs, often earning less.

When the year began, many business leaders were in a near panic, calling the downturn the worst they had seen in their lives. A cascade of mass layoffs and plant closings caused initial jobless benefit claims in a 10-county region from Poplar Bluff to Perryville and south through the Bootheel to spike 80 percent in December compared to July.

That fear has now been replaced by a calmer outlook, said Buz Sutherland, director of the Southeast Missouri Economic Development Alliance. "In January, if you recall, we weren't seeing any way out and that the slide wasn't over. My sense of how people are feeling about their optimism about the economy is that we have bottomed out."

The pervasive pessimism led New Madrid County to write its budget anticipating a 15 percent decline in sales tax revenue. So far, New Madrid County treasurer Tom Bradley said, revenue is down only 2.5 percent.

"Until September, we were on the plus side," he said.

National signs the recession may be easing include a 1.3 percent increase in home values in August, the third month of climbing prices. Consumer spending jumped 1.3 percent in August, fueled by the Cash for Clunkers program but also the biggest gain since October 2001.

Indicators that many people will feel the recession's pain long after it is officially over include a national unemployment rate of 9.8 percent for September, the highest since July 1983, and a 33-hour average workweek, the lowest on record and evidence that many who want full-time work cannot find it.

The recession's effect reinforces the sense, long held among Southeast Missouri business leaders, that the area avoids the worst hits on the national economy but may lag in seeing some of the benefits of recovery.

"Locally, we don't get the highest highs and we don't get the lowest lows," said John Mehner, president and CEO of the Cape Girardeau Area Chamber of Commerce. "We take longer to get drug down, and it takes longer to snap back."

Mehner said he consults regularly with a group of local business managers and owners from a variety of sectors. General retailing is still struggling, he said, but other businesses have reported a rebound. The depth of the downturn focused the chamber's attention on the need for a more robust business assistance and retention effort, he said.

"We always had a business retention program, but we are going to dig deeper now," Mehner said. There were many indicators of trouble before the recession, "and we are going to try to make sure we are ahead of the curve on what we believe to be an indicator."

Finding footing

The late-summer statistics available for the local economy show how far from recent experience the year has been. Unemployment throughout the 10 counties has averaged 8.5 percent through August, compared to 5.7 percent for 2007. That translates into 2,338 more people counted as unemployed now compared to the end of the year. Another 2,122 people are no longer counted in the work force, according to the Missouri Economic Research and Information Center.

The unemployed will find businesses cautious about adding workers, Mehner said. The contraction forced employers to look closely at how they use workers and many have shifted duties or eliminated some aspect of their business to use the remaining employees more efficiently, he said.

"I think employers will rehire when they have to rehire, when demand is such that quality or service delivery is going to suffer unless they do that," Mehner said.

Foreclosures are down regionwide, but not much, and have actually accelerated in some places. Cape Girardeau County has average 15.1 foreclosures per month this year, up from 14.6 per month in 2008 and fewer than eight per month in 2006. If the regional pace continues, 668 families who owned homes in January will lose them by the end of the year.

Bankruptcy court, the refuge for people swamped under debt, is doing a brisk business. In the 16-county Southeast Missouri Division of the U.S. Bankruptcy Court, filings through August are 29.7 percent more than the same period of 2008.

Making ends meet has, for some, meant accepting help they never expected to need. The Southeast Missouri Food Bank recorded a 25 percent increase in demand this summer, said Karen Green, executive director. The food bank has met that demand with increased allocations of federal surplus food thanks to the stimulus bill passed February along with a first-ever fundraising drive and increased donations of extra food from businesses such as Wal-Mart and Tyson Foods, Green said.

National food bank surveys put Missouri in the top 10 for demand. "I can tell you for sure that it is worse in Southeast Missouri than any other part of the state because we have six of the poorest counties," Green said.

At another provider, First Call for Help, the summer didn't generate a big spike in requests for aid, said Denise Wimp, director of the United Way-sponsored program. "I still think that there are folks who just don't know that the call is there to help them maneuver through the social service delivery system."

On Friday, chicken donated by Tyson and meat donated by other providers was distributed, along with parcels of canned goods and bread, at Christ Episcopal Church to an overflow crowd. Margaret L., who declined to give her last name, said she has held three jobs in the last year and narrowly avoided foreclosure twice.

The 55-year-old diabetic said she kept her home by cashing in her retirement fund, taking a big government tax penalty and spending $10,000 to reduce her bills. Her current job, she said, pays her $5 an hour less than the one she lost last year.

"I am usually the one who donates and gives," she said. "The economy has taken a toll on everybody."

Margaret L. said she was denied food stamps and medical aid because her past employment made her ineligible under the income rules. She can't afford to buy much food, forcing her to seek assistance at pantries.

"I barely make enough to go from paycheck to paycheck," she said.

Like those who lived through the Great Depression, the shock of the recession will linger long after the recovery, Sutherland said. People are saving more, he said, but that means consumer spending is curtailed. Seventy percent of the U.S. economy is fueled by consumer purchases.

"Our economy is going to look a lot different coming out of this than it did going in," Sutherland said. "Our consumption-based economy is going to be dialed down, perhaps substantially, and that may not be a bad thing. It is going to make pulling out of the recession a much slower climb out than it was tanking going in."

rkeller@semissourian.com

388-3642

Pertinent addresses:

Cape Girardeau, MO

Poplar Bluff, MO

Perryville, MO

Caruthersville, MO

Need assistance?

First Call for Help in Cape Girardeau helps people in Cape Girardeau, Scott, Stoddard, Bollinger and Perry counties. They can be reached at (573) 334-4357.

In other areas, First Call for Help in St. Louis is available at 800-427-4626