It’s a question on the minds of many business owners right now – are we in for a double dip recession? With slower economic growth and a stalled unemployment rate, business confidence seems to have plummeted. WNPR’s Harriet Jones reports.
Downtown New London can be a challenging place to do business, even in a good economy. A short walk around town reveals persistent empty storefronts and some recent closures. But the city also has many survivors. Cadmarie Bordeaux has run her nail salon on the corner of State Street for the last five years.
“The business has kind of stayed steady. Some customers have been from probably coming two weeks, to probably three weeks, you know, being a little more concerned, but they’ve been faithful. They’ve been faithful and I appreciate that. A lot of the walk-ins probably slowed down a little bit, but my customers – they’ve done good by me.”
Round the corner on Bank Street, Rick Mehlman is the proprietor of Everything But the Stamp, a high end printing and stationary business. He shares a storefront with office furniture store J Solomon, to save on rent. He says he’s seeing the effects of the shaky economy in offers from his suppliers.
“Free freight, free shipping, buy 75 get 25 free – a myriad of options that have never been out in the marketplace before.”
He’s also tracking continued economic gloom in other areas.
“In my personal life we’re very much watching our expenses. We have a youngster still in college. But as a matter of fact this college, Mount Holyoke College is for the first time is offering a payment plan, which I think speaks to something going on in the economy which they’ve never encountered before.”
The caution on Main Street is mirrored in a recent survey conducted by the Connecticut Business and Industry Association – almost three quarters of those questioned expect the state’s economy to worsen in the current quarter, and only six percent expect it to improve.
“What that’s telling me is on one hand, real economic conditions have changed – they’re basically back to where they were a year ago.”
Peter Gioia is the CBIA’s chief economist. He says it’s common to see businesses feeling gloomy about the general economic picture, while they usually feel more upbeat about their own company’s prospects.
“But with so many people, 31 percent, thinking that their own firms may see worsening conditions over the third quarter, it certainly raises a great deal of concern.”
National surveys too have pointed to a big dip in confidence – a recent poll of small business owners showed 88 percent expect their own results to be flat or down in the next year. So does this point to a double dip – officially recession is defined as two consecutive quarters of economic contraction. Gioia says he doesn’t think things will get that bad.
“On the other hand, painfully slow growth of perhaps under one-and-a-half percentage points is certainly I think already in the cards, it’s already in play, and you don’t get job gains with that rate of growth.”
That’s echoed by economist Don Klepper Smith of Datacore Partners.
“With demand being soft, it says employers are going to make do with their existing workforce, rather than add new hires, and jobs are what it’s all about, because jobs create income, income creates spending and confidence and those are the linkages.”
While businesses may be taking a wait and see approach to hiring, some are still maintaining a positive attitude in the midst of uncertainty. Back in New London, Cadmarie Bordeaux says it’s the only way to make it through.
“This is the time to build the business, because when things change, then you’re already established, and you understand. If you can make it though these bad times, you definitely will flourish when the good things come in.”
For WNPR, I’m Harriet Jones.