Weathering the economic storm
CITYWIDE The customers keep coming and sales are flowing, but Shulamit Wilder can sense something is amiss at her jewelry store.
In the past year, the owner of Lorraine Fine Jewelry on Wilshire Boulevard has noticed a change in behavior among her regular clientele — they’re buying less frequently and spending more cautiously.
With the subprime meltdown, increasing number of foreclosures and most recently the stock market crunch, economic experts have been pointing to a possible recession, causing consumers to hold on tightly to their piggy banks as the country weathers the financial storm.
Last week, President Bush announced a $140 billion economic stimulus package that includes a series of tax relief measures, an attempt to give the national economy a shot in the arm by spurring consumer spending. The president met with congressional leaders on Tuesday to discuss the proposed package and reach a middle ground.
Santa Monica resident Alexes Degenfelder said she has been more conservative with her finances lately, keeping the interests of her 3-year-old son in mind.
“I don’t think there’s going to be a recession, but I think we’re going to get close to it,” Degenfelder said as she ran some errands on Montana Avenue on Tuesday afternoon.
In Santa Monica, the economic downturn has had mixed results on local businesses, some reporting a drop in business the past few months, many hardly noticing a change at all but anticipating a change in the near future.
Emma Feldman, the owner of Creative Charm on Pico Boulevard, custom-designs draperies for residential interior designers. Feldman said she has enough work orders to keep her busy the next two months, but isn’t sure how her business will fare beyond that.
“What can you do?” Feldman said on Tuesday. “We can’t predict what we’ll sell in the future.”
Wilder, the owner of the 25-year-old jewelry store, believes a recession is inevitable given factors like the ongoing real estate crisis, adding that everywhere she drives, she sees houses with “for sale” signs.
“I feel it,” Wilder said.” I feel the effects already.”
The story has been the same for the jewelry store’s next-door neighbor, Foreign Affairs, a 30-year-old clothing boutique that has gradually seen a reduction in sales over the past two years.
Mary Jo Parker, who is temporarily managing the store for her friend, owner Margaret Knowlton, said she has noticed that overflow foot traffic from a nearby Starbucks and nail salon has dissipated.
“It seems like people don’t want to spend unless it’s a necessity,” Parker said.
While the sales and use tax revenues for City Hall has decreased, the transient occupancy tax — revenue generated from the hospitality industry — has actually been on the rise, according to City Manager Lamont Ewell, who said on Tuesday that he is still hopeful that a recession can be avoided.
“We are seeing signs of weaknesses,” the city manager said. “Our property sales are slowing tremendously... we are seeing fewer property transfers and for us that means less property tax.”
Ewell added that the city’s coffers will also suffer an impact from the temporary closing of Santa Monica Place at the end of this month while the mall undergoes a renovation until 2009. The Downtown Santa Monica mall and its businesses bring in about $1.2 million in sales tax revenue a year.
“We will feel those impacts and what we can do locally is to continue to invest in our infrastructure because that is going to keep job activities going and it also helps us to keep this city a place of destination,” he said.
The owner of Eliza’s Beauty Center in Sunset Park, Eliza Kudra, said that while sales increased every year from its opening in 2002 until the beginning of 2007, she has noticed that sales remained stagnant recently.
She isn’t sure if that’s a result of the economy or if it’s because her business reached its maximum growth potential. While her loyal clients continue to patronize her business, they have been visiting the store less frequently, Kudra said.
Some businesses haven’t felt the impact of the sluggish economy. Such has been the case of Eco Coastal Cleaners in Sunset Park.
The dry cleaners, which uses an environmentally-friendly non-toxic solvent instead of chemicals, actually experienced a 30 percent increase in business over the past year, according to owner Jennifer Aronson.
“People try to be eco-friendly so that might be why it’s not affecting my business,” she said.
If anything, the screenwriter’s strike might have more of an impact on business in Santa Monica than anything else.
Linda Oppenheim, the owner of Arts & Letters, a stationary store on Main Street, said many of her customers and neighborhood residents are screenwriters. But overall, she hasn’t noticed much of an impact on her business.
“I’m positive (about the economy),” Oppenheim said. “I think everything will be OK.”
Originally published in the Santa Monica Daily Press print edition on January 23, 2008. Read the original PDF.