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Home / Articles / News / Local News /  Fear Itself
Store Closings
Department store CEOs aren’t the only ones lamenting closures; these sign holders will soon be out of work, too.

Fear Itself

Local economy hinges on spending in coming months

November 18, 2008, 12:00 am
Whether stuffing their mattresses with cash or swapping their stock portfolios for gold bullion, Santa Feans want to know: Where’s the local economy headed?

Truth is, nobody knows whether we’ll all be rationing bread in a few months or basking in the green-tinged glow of a New New New Economy, thanks to President-elect Barack Obama and his Ivy League Superhero Squad.

One thing is clear about Santa Fe today: “We’re a lot better off than other places,” Mayor David Coss says.

That’s not merely happy talk from a full-time city booster. While headlines from around the country get scarier by the day, Santa Fe is, if not swinging, at least not sinking as fast as Detroit—or even Albuquerque. (Knock on wood.)
The question stands: Will things get worse before they get better?

That depends on whether people keep spending money here. It depends on holiday tourists but also on you and your friends. Enter the booster: “Don’t panic,” Coss says. “If we all just curl up into little balls and wait for someone to save us, that’s how you turn a recession into a depression.”

Panic? Who said we were panicking?

RETAIL
Last weekend was a mob scene at the Southside malls.

The parking lots were nearly full at Santa Fe Place. Inside Mervyns, which is selling off all of its merchandise and closing by the end of the year, people lined up at cash registers clutching big plastic bags stuffed with totally inessential goods.

Shirts and blankets lay in disarray in the aisles. Over at the (closing) Shoe Pavilion, boxes were greedily torn open.

The discounts ran up to 60 percent. Even at that cut rate, prices were still higher than at Walmart or Goodwill.

In short, even though the closure of several national chain stores will put dozens of Santa Feans out of work, it sure doesn’t look like the next depression.

Times are a little tighter, of course, for the dozen-odd “sign walkers” advertising those department store sales along Cerrillos Road. One man had driven up from Albuquerque for his $8 an hour, “boring as hell” weekend gig holding a “going out of business” sign at a busy intersection.

The sign holder said he was paid under the table, which sort of makes up for the fact that he got shorted—Santa Fe’s mandated minimum wage is $9.50 an hour. A representative from Great American Group, an Illinois company hired by Mervyns to handle all aspects of its liquidation, did not return a call for comment.

LOAN SHARKS
In a down economy, you’d expect the usury business to be booming. That’s not the case for Santa Fe’s payday lenders.

Employees at QC Financial Services on Cerrillos Road and Speedy Loan on Airport Road, both tell SFR that their business has held steady over the past few months.

This constancy suggests that more Santa Feans aren’t turning en masse to these lenders-of-last-resort to buy groceries.

TOURISM
Maybe the best economic news in recent memory was the 600-word piece on Santa Fe in the Nov. 16 New York Times Sunday Travel Section.

The coming holiday season has effects beyond the hospitality industry. Tourism supports 40 percent of the local economy, according to Convention and Visitors Bureau Executive Director Keith Toler.

And this autumn lull isn’t as bad as it could be.

“We’re not setting the woods on fire, but we’re not losing market share either,” Toler says. Meanwhile, other destination cities are seeing significant declines.

September figures from the New Mexico Lodging Association show a 3 percent decline in Santa Fe’s hotel occupancy rates from last year. That’s approximately half the decline hotels have seen around the country and the state.

Coss hopes a $400,000 marketing push—matched with ad cash from local hotels and resorts—will draw gawkers from around the country to Santa Fe’s 400th anniversary.

In the meantime, Toler says, staying flat is as good as growing in a year this uncertain.

JOBBY JOBS
In September, Santa Fe County had an unemployment rate of 3.3 percent, according to the most recent figures from the US Bureau of Labor Statistics. That’s up 0.5 percent from last September.

RESTAURANTS
Al Lucero, who owns Maria’s New Mexican Kitchen and serves on the board of the local restaurant association, says more established dining spots are “doing pretty well.”

“I haven’t heard anybody complain—other than the normal first-couple-weeks-of-November blues,” Lucero says.

But increased prices from restaurant suppliers—a result of high corn and fuel prices—are starting to take a chunk out of his margins.

“It’s getting to be brutal,” Lucero says.

GALLERIES
Toler says a recent focus group of gallery owners found declines in the higher-end art market—pieces from $1,000 to $20,000—but sales of pieces priced under $1,000 were stable.

That said, it’s hard to generalize about a notoriously finicky market. Higher-ticket pieces are moving just fine at the InArt gallery, according to Co-Owner Latricia Gonzales-McKosky, president of the Santa Fe Gallery Association.

She says while November was quieter than October at her gallery, people are traveling here with a mind toward buying. “We’re seeing less people that are just lookie-loos,” she says.

Overall, Gonzales-McKosky is bullish.

“We have not had any galleries close this year,” she says. “Anything that closed [last year] has been replaced and then some.”

CITY SERVICES
Because the City of Santa Fe’s budget leans heavily on taxes gleaned from purchases made locally, every unsold sculpture and skipped meal means less money to pay the salaries of Santa Fe’s cops and firefighters.

City Finance Director David Millican says he expects flat revenue growth next year. Albuquerque, by contrast, expects a 2 percent decline.

As a precaution, city departments have been asked to prepare for 10 percent cuts next year. Even if that worst-case scenario comes to pass, the consequences of long-term cutbacks would not be devastating. Millican says it’s the difference between sending more police to patrol troublesome streets and organizing a neighborhood watch program.

The greatest danger for Santa Fe may be that talk of economic crisis becomes self-fulfilling. And, if they were paying attention over the past eight years, Americans should now understand the consequences of fear and paranoia.

As Kate Noble, a specialist with the city’s Economic Development Department, puts it, “Recession is the new terrorism.”

 

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