Suddenly, prices of milk and bread start climbing. Foreclosures rise. And pink slips begin appearing on office desks.

If you remember 2001, or 1991, 1982, 1980 or 1975, then you know the warning signs.

CHRONICLE FILE

Smokey Bones restaurant is one of the Midway Mall-area restaurants that have closed in the past year.

Economic advisers under President Jimmy Carter weren’t allowed to say that horrible R-word that seems to be on everybody’s lips these days. Instead of “recession,” they had to use the codeword “banana.”

Unfortunately, area experts are starting to worry about the 2008 banana crop.

Frank DeTillio, president of the county Chamber of Commerce, said a national economic slowdown is taking its toll on local businesses.

The housing market is a mess, builders aren’t building and oil prices are up, he said — all signs that the economy could be heading into a downturn.

“Everybody’s thinking about pulling in their horns on investments,” DeTillio said. “They’re trying to spend conservatively to weather the next few months.”

Business owners are uneasy about where the economy is headed, said Amy Butrey, who runs Spherion staffing agency branches in Elyria and Medina.

Her industry is booming right now, she said, and that tends to signal a certain pattern.

CLOSED DOWN The local economy has taken a beating in the last year. Here are some of the Lorain County enterprises that have closed or are in the process of closing: • Value City Department Store in Elyria • Elyria Harley-Davidson • Del Lumber in Elyria • Bradco-Wickes Lumber in Elyria • Riveredge Health & Fitness Complex in Sheffield • Tokyo Steakhouse in Elyria • Dillard’s in Elyria • Lorain National Bank’s Kansas Avenue branch in Lorain • Smokey Bones in Elyria • Office Supply Center in Elyria • 5 & Diner in Sheffield • Spitzer Auto World in Grafton • Missler’s Super Valu in Oberlin • Chao Praya Chinese Eatery in Elyria • Giant Eagle in Elyria • Sofa Express in Elyria • Medicine Center in Elyria • El Jarabe in Elyria • Johnson Controls in Oberlin • Sedona Grill in Sheffield

“When employers start talking about recession, they tend to fall back and use employment services more often,” Butrey said.
Spherion surveys Ohio workers every month. In December, the company found 34 percent of those surveyed said they are likely to look for a new job.

At the same time, 23 percent said they believe their jobs are in jeopardy, a 17 percent increase since November, Butrey said.

Things may look grim, but that doesn’t mean we’re dealing with a recession just yet, two leading Ohio economists said.

“It’s difficult to tease out how much of what’s happening is a recession and how much is growth,” said Edward “Ned’’ Hill, a professor of economic development at Cleveland State University. “The issue you have in Elyria is that the eastern edge of Lorain County has been getting the growth lately.”

For the last several years, development has been gradually migrating outward from Cleveland toward the eastern edge of Lorain County, Hill said, resulting in a
surge of investment in North Ridgeville, Avon and Avon Lake.While it’s growing there, Hill still expects a mild recession will settle in this year. And, he said, urban areas such as Elyria and Lorain could suffer the worst of it.

“The trump card is what happens with consumer confidence,” he said — and it will be easy to gauge that when people start getting income tax returns.

“If you get your rebate from Uncle Sam, Uncle Sam wants you to go out and spend it,” Hill said. “But if you think you’re in danger of losing your job, you pay down the debt on your credit card. We’ll watch and see what people do with their money at tax time.”

Ken Mayland, who runs Clearview Economics in Solon, and is a nationally cited economist. He believes there is still hope of avoiding recession.

“We’re getting pretty close to the wire,” he said. “But things change month to month. You need several months of widespread economic problems before it can be called a recession.”

It takes more than a union strike, a Hurricane Katrina-level natural disaster or an 800-point drop on the stock exchange to trigger a recession, he said.

And there are some good signs, he said.

Mayland said the national economy and employment grew overall in the fourth quarter of 2007.

Exporting has been strong, and even though the housing market has been weak, there has been an upswing in construction of commercial buildings, Mayland said.

Manufacturing also has been steady, he said, but Hill said the auto industry is one exception.

Domestic automakers continue to struggle, putting extra economic pressure on Ohio, Michigan and Indiana, he said.

“People are saying this might not be the year to go out and buy a $22,000 car — or in our case, an Econoline,” he said.

DeTillio said 10 years ago, the auto industry’s struggles would have posed a bigger threat to Lorain County.

Since then, the county has diversified its economy, moving away from overdependence on manufacturing, he said.

“We used to be steel and automakers. We still have a steel plant, and we still have an auto facility, but now we only have 2,000 employees in steel when we used to have 13,000. We only have 3,000 in automaking when we used to have 10,000,” DeTillio said.

His biggest worry is that demand for the equipment and machinery built in Lorain County will decline, he said, and that will be the big red flag that will signal a recession is here.

Contact Jason Hawk at (440) 329-7148 or jhawk@chroniclet.com.

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