The long-delayed 1980 recession finally has burst over the nation, but it's as uneven as a summer storm: It's raining buckets in some places and merely drizzling in others.
True, by most standard measures, the downturn is proving one of the worst in postwar history. The nation's unemployment rate has soared to 7.8 percent of the work force -- the highest since 1976 -- and still is climbing.
And cities like Detroit are suffering massive layoffs that have left hundreds of thousands jobless, crippling the local economy. To many Americans, the slump already is worse than the deep recession of 1973-75.
But visits to this and five other cities across the country show that while the downturn has cut severely in some key industries and communities, its impact nationally has been spotty, still confined largely to autos and housing.
Beyond some admittedly severe trouble spots, the underlying economy still seems only moderately soft.
As a result, while the Detroits of the nation are distressingly hard hit -- probably far worse than in 1973-75 -- cities such as Worcester, Mass.; San Jose, Calif.; Columbus, Ga.; and Dallas so far have escaped much serious hurt.
"We're still waiting for the recession to hit Worcester," says Karl Augenstein, general manager of that city's biggest downtown shopping center. "Business is not as great as we'd like, but most stores are keeping pace."
The assessments in several other key cities visited during a two-week trip around the nation late last month are similar, though not quite as upbeat as Augenstein's.
Mason City, Iowa, has been hit more than usual for a recession, largely because of the slump in farm prices, but almost everyone locally agrees the economy isn't in such bad shape. The jobless rate there is 5.5 percent.
In San Jose, Calif., where the continued surge in electronics is buoying the local economy, the only job cuts have been among auto dealers and construction firms. Most other business are keeping pace or just slightly off.
The same picture emerges in Dallas, where the downtown construction boom is helping the local economy stay afloat. And in Columbus, Ga., except for a few shutdowns at textile mills, there's little evidence of a serious slump.
The widespread impact -- and public recognition -- of the recession across the nation contrasts sharply with the prevailing attitude only a few months ago, when most Americans seemed skeptical that the slump would ever come at all.
As late as last October, Louis D. Clay, president of Ipsen Industries Inc., a major ceramics manufacturing company here, still was proclaiming boldly that "If there is a recession, we don't intend to participate in it."
Eugene Zorn, a Dallas bank economist, then reported seeing "no significant signs of recession. There's a tight labor market and sales are high."
Today, a somewhat sheepish Clay concedes the recession has in fact come to Rockford, but insists his own firm's sales are continuing high and predicts that spending for capital goods will continue strong in coming months. p
Perhaps nowhere is the two-tiered impact of the current recession more evident than here in Rockford, a medium-sized heavily industrial city whose base includes both housing and auto-related firms as well as general manufacturing.
Largely because of the cutbacks in autos and construction, the factories here that make brake-shoe parts, cabinet hinges and the like have seen orders shrink so quickly that production has ground to a halt.
By contrast, Rockford's burgeoning defense and machine-tool manufacturers are begging for skilled labor -- and complaining because existing workers sometimes don't want extra weekend workdays.
But layoffs have reached unprecedented levels in the Rockford area, totaling about 6,000 since last December. Many have involved production workers with as much as 40 years' seniority.
The jobless rate here, so far, is up to 8.4 percent -- still far below the 10.4 percent peak it reached during the 1973-75 recession, but significantly above the 7.8 percent jobless rate recorded for the nation as a while in July.
The line at the city's unemployment office stretches three-quarters of the way around the building at the start of business every morning. New claims for jobless benefits -- many involving temporary layoffs -- soared to 7,400 a week in June from only 2,729 last October.
L. M. Weiss, director of the state unemployment benefits office here, notes that the layoffs already have cut far more deeply than in the 1973-75 recession, sometimes hitting workers with 30 and 40 years' seniority.
"A lot of people are filing for unemployment benefits now who never filed in their lives," Weiss says.
One local firm, the National Lock Co., a fastener-manufacturer caught in a squeeze between the autos and housing slumps, has slashed its work force by half and is requiring workers still on the payrolls to take unused vacations.
"Overtime? We don't even know how to spell the word," says Charles W. Holzwarth, group president of National Lock.
"We're down to what is called a viable economic size," he says. "And we don't see any letup anytime soon."
Roy Rauch, president of the local United Auto Workers union, says only a handful of those laid off from National Lock have been able to find jobs elsewhere. Confirms Holzwarth: "The majority are just sweating it out."
The impact of such massive layoffs, predictably, has shaken the rest of the city's struggling economy. Most local merchants report sales have fallen off visibly. And some retailers have cut their store hours.
A few, financially shaky stores have folded. Paul Salmons, manager of a shopping center in a blue-collar neighborhood, reports at least one of his stores has closed for economic reasons.
Although most of Rockford's laidoff workers still are covered by federal or union unemployment benefits, the joblessness poses financial any psychological penalties -- many of them stringent.
"You just climb the walls," laments Dennis L. Yost, a 33-year old husband and father laid off May 15 from his job in a Rockford brake-drum factory. "The jobs that are available aren't worth taking. I wind up reading a lot."
The pinch also has produced some other changes in Rockford's lifestyle:
Police report the city's crime rate has risen sharply since the recession began last January -- particularly in economic-related offenses: Robberies have soared to 67 percent above last year's levels. Burglaries are up 46 percent.
Because of the economic squeeze collections are "off a little bit" at the First Evangelical Covenant Church, the Rev. Stanley Henderson reports. "Rockford has a tendency to base its lifestyle on current overtime levels."
Stanley Drummond, manager of the local radio store, reports fewer customers are charging their purchases, and more are using layaways and cash purchases.
"Nobody's kidding about the recession anymore," says Moncie Hansen, a local employment counselor, who herself was among the optimists as late as last fall. Adds consultant Norbert E. Schwarz: "We've got a lot more believers."
Still, the picture is strikingly different at Rockford's plethora of aerospace and machine-tool companies, where the new push in defense spending -- and the automakers' rush to retool for 1982 -- is keeping factories humming.
dick Clark, executive director of Rockford's Chamber of Commerce, reports that capital goods plants in the city are "still doing extremely well and still expanding."
And there's enough money elsewhere in the city so that restaurants and travel agencies still are booming.
"It's simply amazing," says Gerald Robey, pastor of Rockford's Brooke Road United Methodist Church: "My wife and I ate out Thursday night, and we had to wait in line to get in."
Businessmen report the roots of the current slump began last October, when steadily rising interest rates cut into the housing market and auto sales began falling in response to soaring gasoline prices.
Then came the sharp runup in inflation in January, which scared many consumers, and the unprecedented rise in interest rates. The real estate market ground to a halt. Consumer spending fell off.
But what really seemed to hit the economy with force, many now recall, was President Carter's surprise March 14 move to restrict the use of credit cards and bank lending.
Almost overnight, analysts recall, Americans put away their credit cards and cut back. Retail sales fell off sharply from previous levels. The recession was in full-swing.
The combination squeeze jolted businessmen across the nation, who suddenly found themselves with large, expensive inventories and little prospect of selling them.
In San Jose, Mike Billings, a local Chevy dealer, immediately canceled all outstanding orders from the factory and trimmed his inventories from three-months' worth of sales to 45 days.
"The interest charge for the loans I need to keep cars on the floor was 21 percent in April and May," Billings says. "I was lucky because I was able to move quickly. I'm so low on inventory now, I buy them from other dealers."
For several months during the squeeze, the going was rough, businessmen report. Most rode out the storm successfully -- aided by nervous bankers, who stretched out repayment schedules rather than see their loans collapse.
But interviews with businessmen, bankers and credit managers in several cities show the slide already has begun to slow down, and business is picking up again -- including domestic auto sales and real estate transactions:
With home mortgage interest rates back down to the 12 percent range, real estate brokers report building permits are edging back up and home sales are increasing, though not quite at last autumn's pace.
"The market is showing strong signs of life again," says Bill Oertel, a Mason City broker. Adds Rockford realtor Edward Sowards: "We finished off June above our bread-even point for the first time in five months."
Auto sales, aided by declining financing costs and more aggressive promotions by dealers, also are starting to pick up in many communities, albeit at levels far below those of 1979.
Richard Robidoux, a Worcester auto dealer, reports "a visible pick-up" in sales beginning a month ago. "It's still too early to predict a big rebound," Robidoux says. "But it has to get better now."
Appliance and furniture sales are rebounding following a falloff in some communities during the April credit squeeze. Warner Johnson, a Rockford dealer, says his own business suffered a "six weeks' lull. But now it's all over."
At this writing, most analysts agree it's still too early to be sure whether the recession has hit bottom.
Economists aren't formally predicting a turnaround until late this year or early in 1981. The jobless rate is expected to continue rising for several more months.