It’s gloom times for the economy
The numbers stopped adding up some time ago, and every month, Shane Covelli gets angrier.
He sells heavy equipment on commission, and construction firms aren’t buying. Covelli has sold his Corvette, stopped taking his wife out to dinner, pulled his son from the ski team. He has withdrawn nearly $50,000 from his retirement accounts and started taking extra work, laying carpet and pouring concrete evenings and weekends. Still, he owes more than he earns, and he can’t seem to fix it.
“It’ll take the country four or five years to dig out of this,” said Covelli, 44. “By then, I’ll be bankrupt.”
President Bush this week set aside months of sunny talk to warn that the nation’s economy faces challenges. “Many Americans are anxious,” he said.
Exit polls from the New Hampshire primary Tuesday confirm that: 97% of Democrats and 80% of Republicans are worried about where the economy is headed. Only 14% of Democrats -- and about half of Republicans -- consider the current state of the economy good.
Asked about their own families, 28% of Democrats and 17% of Republicans said they were falling behind financially.
Their concerns will resonate on the campaign trail and in Washington, as Bush and Congress debate tax cuts and other measures to stimulate the economy. But it’s in homes across America that the anxiety is most keenly felt.
In Lancaster County, S.C., laid-off textile worker Johnny Brown, 57, has parked his beloved Ford truck outside his double-wide. He’s been driving it for 25 years; he rebuilt the V-8 engine himself. But it runs only on premium gas and he can’t afford that, so when he has to drive, he uses his wife’s sedan.
In Atlanta, Bernadette Smith, 31, has watched her credit-card debt climb to nearly $40,000. That’s more than her annual take-home pay, though she works 13 hours a day at two jobs. Once obsessed with the latest style of designer jeans, Smith now shops for clothes only at Wal-Mart, or maybe Target. She has come to consider a dinner at Ruby Tuesday a splurge.
The faltering economy costs Leslie Garza, 18, nearly an hour of sleep each morning; her mom won’t spend the gas money to drive her to downtown Los Angeles for her job scooping ice cream. So she sets the alarm early and takes the bus. Garza recently canceled her cellphone service to stretch her $450-a-week paycheck.
While analysts are divided on the risk of recession, many agree that the economy will stay soft for some time. “It will be at its weakest in the two to three months right before the [November] election,” said Gus Faucher, a director at the consulting firm Moody’s Economy.com. “That will be one of the top two issues in the campaign.”
Public anxiety is not universal, of course. Oil and gas workers are riding high as prices soar. Export firms are thriving because of the weak dollar. A prominent Manhattan law firm recently handed out special year-end bonuses of up to $50,000 per associate -- on top of regularly scheduled bonuses of $35,000 or more.
In Sedalia, a speck of a town in central Colorado, Gary White has found the slowing economy a personal boon. A few years back, he had trouble filling his rental properties. No one wanted an apartment -- not when they could get into a house with little or no down payment and an adjustable-rate mortgage that started out low.
In the last year, however, many of those homeowners ended up in foreclosure. White, 58, now has plenty of renters.
“I’m not terribly worried at this point,” he said as he worked on an oil painting in an art gallery he owns.
Still, White acknowledged that he was spending less -- he and his wife didn’t exchange gifts this Christmas -- out of concern that the economy could take a prolonged dip.
All over the country, even the financially secure are making similar calculations.
Enoch Brown, 49, a data- entry worker in Atlanta, said his annual household income is about $100,000.
Yet he’s riding public transportation to work so he can save on gas and parking.
Antonio Dabu, 54, who owns a real estate office in Jersey City, N.J., told his wife they may have to quit subscribing to HBO. “Everyone is scared about every little expense,” Dabu said as his secretary waited -- in vain -- for new clients to call.
Nearly 40% of Democrats voting in the New Hampshire primary called the economy the most important issue facing the nation. (New York Sen. Hillary Rodham Clinton won handily among that group.) The economy also emerged as the top issue for Republicans, especially those who backed Arizona Sen. John McCain.
But even as voters demanded that candidates address their concerns, few interviewed this week had hope that any politician could make much difference.
The economy has been buffeted by the mortgage crisis, high oil prices and a weakening job market. (Unemployment rose to 5% last month, up from 4.7% in November.)
The consumer confidence index put together by the University of Michigan fell last month to its lowest level in more than a decade (with the exception of a one-month dip in 2005 after Hurricane Katrina).
Though voters said they would appreciate a tax cut -- or help paying for health insurance -- they’re not expecting much.
“We know all the politicians out there do a dog-and-pony show to get elected,” said Fred Siddiqi, 49, an electrical supplies salesman in Las Vegas.
He plans to apply for a second job -- as a sandwich maker, perhaps -- to keep his family afloat.
“I keep thinking: ‘We’ll manage. We’ll manage. It’s a piece of a cake.’ But it’s not,” Siddiqi said.
Covelli, the heavy-equipment salesman in Colorado, started taking medicine for high blood pressure this week; he blames the stress of always feeling broke -- and hearing the same from his customers. “I have 10 or 15 people a day telling me how bad it is,” he said. “I don’t think it’s going to get better.”
During the 1990s, Covelli said, he made up to $135,000 a year. Even when construction slowed after the Sept. 11 attacks, he was taking in about $80,000. Last year, he made $51,000.
Each month, Covelli’s bills outrun his income by at least $1,800.
“Everything is more expensive, but I’m earning less,” he said.
His co-worker David Reiter, 49, nodded glumly. “That doesn’t work. It just doesn’t work,” he said as he picked at a salad in the Sedalia Grill. “And it’s getting worse and worse.”
Down the street, hairstylist Lisa Nartowicz, 39, shared that sentiment.
Her husband, who installs heavy power lines, was laid off more than a year ago when construction projects slowed. She still has her job, but customers are skimping: Instead of a full dye, they just want their color retouched. They come for a trim, not a cut-and-style.
The Nartowicz household income has fallen by more than half, to about $40,000 a year. They have four children; their oldest joined the Air Force this week so he will have money for college. He will be the only one in the family with health insurance. Nartowicz tried to buy coverage, but the best quote she got was about $2,000 a month for the family.
“What do you do? Just hope you don’t get sick,” she said.
The family cut out their annual summer camping trip. Instead of throwing steak on the grill, Nartowicz serves inexpensive sausage for dinner. When her favorite coffee creamer went up in price this week -- from 97 cents to $1.38 -- she felt her anxiety level rise too.
“You have to stay positive for your kids,” Nartowicz said.
“But I do feel stressed. I feel very stressed.”
Times staff writers Richard Fausset and Jenny Jarvie in Atlanta, Stuart Glascock in Seattle, Erika Hayasaki in Jersey City, Ashley Powers in Las Vegas and Susannah Rosenblatt in Los Angeles contributed to this report.