On the day the good news about Rockford was reported, Anita Rasner went to work early in the morning as usual.

"Recovery?" she said as she cleaned the motel room. Nearby lay a newspaper reporting that Rockford, which led American cities in unemployment just last summer, had dropped out of the nation's top 20 jobless areas. "Not now. If recovery does come, it's going to take years for me to get the job in the factory that I want."

While she made the bed, she spoke about herself. She's 22 and has two part-time jobs in addition to her work as a maid. Her husband, who has been laid off for a year from his factory mechanic's job, takes care of their 7-month-old child during the day. Both are on call every night for emergency ambulance work. She says she's tired constantly and finds new strains in her marriage. Her plan was to become a diesel mechanic, but that hope, like so many others, is fading.

Rasner was expressing the other side of recovery in Rockford: the belief that even after the harsh recession finally gives way to the long-awaited recovery, life will never be the same. She is scaling down her lifelong aspirations.

This report, the first in an occasional series examining key issues that are affecting people's lives in selected American communities, was reported and written by staff writers Haynes Johnson, Margaret Engel, Jerry Knight and David S. Broder, with polling by Barry Sussman.

"It used to be you could dream a lot, have a lot of goals to set," she said in the same quiet, matter-of-fact tone. "Well, now your goals are just to pay your bills, and that's it. Hopefully . . . you make it stretch that far. You don't dream about going on a two-week vacation out to Colorado, California, or anything like that. You can't afford it."

Anita Rasner and countless others like her know that this recession, the most severe to sweep across the Midwest since the Great Depression represents much more than another cyclical shift in the economy. Something permanent has happened to Rockford and its people.

It means young couples deciding not to have children, and older couples delaying having their children immunized because of the expense. It means elderly people telling health workers that they are using their medicine money to pay utility bills, and single professionals approaching 30 moving back into their parents' homes because they either have lost their jobs or no longer can afford the independence of living alone. It means part-time work wherever and whenever it can be found, at whatever pay is offered. It means putting off vacations or purchase of a new car or home appliance. It means further school closings and cutbacks even as parents and school officials talk about how to achieve that excellence in education called for by national commissions.

This sense of lowered expectations runs through virtually all the conversations with dozens of Rockford citizens conducted by a team of Washington Post reporters and is reflected in a Post poll of 566 residents here.

"There are going to be fewer tickets, even for people like us," a young doctor remarked the other night in a living-room gathering of other professionals and their wives, none of whom has suffered economically from the recession. He meant that everyone, including those with medical diplomas or law degrees, would face greater competition for positions in the future.

That does not mean Rockford resembles a stereotyped picture of Recession City, U.S.A., with shuttered factories and the bleak air of depression. Its people exhibit a resilience and a confidence that are particularly impressive given the hardships many face. Rockford's splendid parks and well-tended, prosperous-looking neighborhoods make it hard to believe this community has been hit so devastatingly.

This sense of two Rockfords existing side by side permeates all the conversations with people here.

The car dealer who tells you his business "in the last 60 days has gotten amazingly good" stands alongside the religious leader who sees economic disparities widening rapidly throughout the city. The high school principal who speaks with an old-fashioned faith in the future finds his words at odds with the more pessimistic tone expressed by his own graduating seniors. The industrialist who says the recession "in the long run is probably beneficial, it probably made us a stronger competitor," expresses an opposite view from the social worker who sees people facing greater hardships now than in the trying months just past.

There is, though, a clear consensus that this recession has altered life here, that when it ends Rockford's problems will not be over.

An intensive look at this city 80 miles west of Chicago shows that although the hard times here in Illinois' second largest city have affected President Reagan's standing with the voters, so far he has paid a surprisingly low political price for the recession. This stems in part from a widespread belief that even in this center of basic midwestern thrift, self-reliance and conservatism, economic troubles began months or even years before Reagan became president. He gets credit for curbing the ruinous inflation that remains a topic of continued concern. Still, voters here express troubling new questions about his presidency.

Rockford's message to Reagan, who grew up in Dixon, a few miles away, comes with equal measures of complexity and simplicity. In capsule form, distilled from tape-recorded interviews with more than 100 citizens, it would be:

We don't blame you for the recession. We'd gotten too fat, too comfortable, too uncompetitive. Our standards aren't as high as they used to be and there's plenty of blame to go around between labor and management.

Besides, we still believe in those Puritan values you talk about. Perhaps we had to suffer to purge ourselves of our excesses. But we really don't think you appreciate the pain we are feeling.

And while we're about it, Mr. President, we just don't buy your rationale for the big defense buildup. We want to cut defense spending, because we know there's waste there, too, and we don't think those cuts will weaken America, either.

As for voting for you again, well, we're not so sure. We like you as a person, but we're going to listen carefully to what you and others think America ought to be doing in the 1980s to make the changes that will produce a sounder, more secure and stable country.

The Post poll of Rockford citizens statistically underscores that message. Although six people in every 10 polled say they believe the national economy is getting better, by 56 to 19 percent they say Reagan's presidency has made things worse in Rockford. And the poll shows an overall switch away from Reagan since he carried this area handily in 1980. Among those polled he got 53 percent of the votes then. In a rematch he would get only 40 percent.

Rockford's message to the country in terms of what this recession is doing to the economic and social fabric of an industrial community is clear.

Here, the highly skilled, blue-collar workers--"artists of heavy manufacturing," as one person described them--are grimly engaged in a battle to hold their own. For many, that struggle already is over. It is estimated that about 15,000 manufacturing jobs have been lost permanently from this area.

Recovery in some areas of the local economy notwithstanding, the search for work here continues to be demoralizing. For every available job opening, 87 people are in competition.

The single most riveting statistic in Rockford today involves the ranks of the "new poor." Many of them--people who made all the "right" economic moves, progressed and always expected to be better tomorrow than today--have fallen into a lower economic class. And it is the once highly paid, blue-collar workers, especially those over age 40, who are bearing the greatest burden in that changed status.

Of the unemployed in Rockford today, one of every four is over 40.

The impact of the recession on Rockford's city services and people's lives is all too easy to measure. Despite extraordinary efforts by city agencies and church and other volunteer groups, Rockford faces growing problems in meeting basic health, shelter and nutritional needs.

"There are efforts--and they're kind of Band-Aid efforts--to stir up sympathy and set up soup kitchens and so forth," said Roman Catholic Bishop Arthur O'Neill. "They are not sufficient to meet the unemployment situation and to try to feed the hungry."

The reality of Rockford today is that for increasing numbers of its citizens the so-called safety net has stretched to the breaking point, and the months ahead promise to be more difficult despite the improving economy. The latest official city figures show the number of people out of work who are not covered by unemployment insurance is 14,000, and is growing at a rate of 5 percent a month. Even though increasing home and auto sales signal economic improvement, business leaders recognize that the community still faces hard adjustments.

"In the coming year to 18 months we're going to have to have things done, both public and private, virtually along welfare lines for some of these people," said David Knapp, a prominent banker and strong Reagan backer. "Maybe the answer is that Washington has to get involved. Something's going to have to be done, because we've got people that .re out of jobs and they're not going to find them.

"Not only that, they can't afford to move someplace else. They've got a house here they can't sell, or perhaps they don't have the skills they can use somewhere else. I think it is going to get worse in the coming 18 months because we've had enough unemployment benefits already run out, and enough of these various state and federal and, to some extent, city programs are going to run out."

Inevitably, all this creates stress, fear and frustration. It is common to hear people express the belief that the disparity between rich and poor, haves and have-nots, is growing in Rockford. Some see the middle class coming close to being squeezed out of existence.

Bishop O'Neill said: "The unemployment situation, even though it's a large percentage, it seems to me it has not had any direct effect on the life style and the habits of those who continue to be employed. There's still a lot of what's called high living, country club scenes and parties."

In Rockford, a classic patriarchal society, the strain of the recession is affecting families. For the first time, many men here find themselves forced to stay at home, perhaps permanently, while their wives provide the sole family support. This situation affects not only the blue-collar workers but also many senior executives whose firms have been hard hit or even closed. Many of these professionals are electing to take early retirement.

"We're worried about our males," said Ruth Meyer, a church volunteer, voicing the common concern. She told how her husband, an executive whose company was in trouble, had just decided to take early retirement after suffering a heart attack. His group, too, thus is among the citizens who find themselves scaling down their expectations.

In Rockford's East High School, graduating seniors also talked about seeing their futures quite differently.

"There's a lot more pressure," one said. Several used the word "tougher" to describe what they expect to face: tougher competition for jobs, tougher economic struggles. "There are going to be extra hills to climb," said another.

Nearly all said they thought their lives would be harder than their parents'. "The classes are starting to stagnate," one remarked, to general agreement. "There's going to be less opportunity for us to move up the way our parents did."

These students spoke without any sense of bitterness or despair, just as their parents did. Sure, it was going to be tougher, but they would just have to work harder.

That sort of attitude springs out of the fiber of this community, which has a church on every other corner and still displays many attitudes inherited from the Swedes and Italians who followed the original New England immigrants here to the Illinois prairie.

Rockford remains a strong community. It has been blessed with a high quality of political leadership, both in its local government headed by a Democratic mayor, John F. McNamara, and its congressional representation by a Republican, Lynn M. Martin. It is also blessed with civic-minded business executives and a capable work force.

Many of the people we talked with see the changes as a challenge to improve the city's economic livelihood and well-being of its citizens instead of a subject for gloom and defeat. Many would like to see an equal degree of realism from their leaders in Washington. CHAPTER II: The Needy

At 8 a.m. lines form outside locked doors all over Rockford.

Women and children line up at the Crusader Clinic seeking discount medical care. Renters stand outside the Rockford Township office seeking help. The unemployed line up outside the state offices seeking benefits. The poor wait at the Winnebago County Public Aid office seeking food stamps and welfare. In the particularly depressed southeast side, people wait three deep at the St. Elizabeth Community Center for five pounds of free cheese and butter.

By mid-morning the lines are gone. Visitors merely see pleasant Italian neighborhoods filled with backyard grape arbors, neat Scandinavian homes, and a church on every other corner. The city's restaurants are busy and most malls are modestly prosperous.

But inside many of those church basements, newly organized food pantries and soup kitchens are giving away groceries and hot meals.

Charity in Rockford is no longer for "the poor always with you" that were mentioned in the Bible. Suddenly, industrious, skilled tradesmen and women who have never been without a job are living on handouts.

Most people in Rockford are still untouched and prospering, but even they worry about financial security as they see familiar businesses close and neighbors cut back.

There has been an unprecedented effort by Rockford's citizens to deal with the burden of 20 percent of their neighbors living without work. United Way contributions set a record last year, and the city has weekly food drives and a flood of free workshops on how to help the unemployed find jobs.

Even some who are now working in charity once held jobs and fell victim to the recession. Chandler Blewett, 36, a lawyer and banker, lost his job last August and was out of work for seven months before finding a job. Now he helps run a Christian jobs service to help others in his situation. Jim Gallagher, who helps prepare meals at the Emmanuel Lutheran Church Soup Kitchen, was out of work for months after losing his job as a contract manager and now commutes 70 miles to suburban Chicago for work.

There's a widespread belief that the months ahead will be the bleakest yet, as 100 to 150 people each week lose their unemployment benefits.

"It's getting worse for us," said Gwen Robinson, director of the city's Department of Human Resources. "All of our telephone lines are tied up all the time, every day."

The hardships seem beyond the capacity of citizens alone to solve. "Right now, it's a disservice to mankind to have Rockford the way it is," said John McCoy, director of Catholic Social Services. "The problems can't be cured by volunteers."

The number of food stamp and welfare recipients has risen dramatically, and each county aid worker now handles 235 cases, up from 90. Utility shutoffs are increasing, and 11 new food pantries have opened in the last year.

The county mental health clinic is seeing 12 percent more people but can offer little solace.

"Pointing the unemployed people toward a future is very difficult," said Marcella Harris, manager of the Janet Wattles Mental Health Center. "We can do very little except monitor the depression."

After a three-year decline, reports of child abuse and neglect jumped by 245 cases this year, affecting 1,836 children. Rockford's only shelter for victims of family abuse has been full for six months, with women and children sleeping on the floors because they have nowhere else to go.

All free and reduced-price medical clinics are overloaded.

"We're backed up six to eight weeks for new patients on medical service, three to four months for dental service," said John Frana, 38, director of the 11-year-old Crusader Clinic, which operates out of a former convent. The clinic has had to turn away pregnant women seeking federal food supplements because the program's resources have been exhausted. "We have people calling us now for school physicals for the fall because they know they won't be able to pay for them then," Frana said.

Three persons have had heart attacks, one fatal, in the Crusader Clinic in the last six months, coincidences Frana attributes to workers without health insurance failing to seek help because they cannot afford it.

There has been a five-fold increase in women seeking birth control from the Winnebago County Health Department as the change in breadwinner roles makes pregnancy financially unwelcome. The waiting list for family planning is now six weeks. All 4- and 5-year-old children have been dropped from the Women, Infants and Children federal food program in order to stretch the dollars.

"People are showing up at 'well-baby' clinics with all their sick children" of any age, said Toma Nesbit, nursing director for the health department. "We're not set up to give care, but we've been doing it."

Visits to hospitals and doctors' offices have declined. "We don't even dream about going to doctors," said Laura Picorella, 22. She and her husband, who was laid off for two years, still owe $1,400 to Swedish-American Hospital for the birth of their youngest daughter.

Housing repair has suffered and illegal garbage dumping to save collection costs is a growing problem. "They'd rather spend the money for food than garbage," said county environmental sanitarian Jim Anderson.

"Our thrift shop is always selling out of candles," related Helen Marander, education director of the Mt. Zion Lutheran Church. "We're cleaned out because they're being used for light to conserve electricity."

Federal and state budget cuts have worsened the plight of Rockford's poor. A cap on the number of Medicaid days of hospital care for which the state of Illinois will pay has stopped all non-emergency surgery at two of Rockford's three hospitals. The poor are now kept on waiting lists for surgery.

Although the city's extensive parks system actually has benefited from the recession, with large numbers of people receiving township assistance for performing "workfare" tasks in them, the city's school system is in trouble.

Because of reduced corporate property taxes and state aid, 347 teachers have been laid off for the coming year and three schools have been closed. Emotions ran so high on school closings that policemen kept a 24-hour guard at the school board members' homes.

Patricia Thompson, who has worked for the county for 15 years, said that she and her husband, a medical technician, work harder to avoid being laid off. "The uncertainty of whether you're going to have a job is terrible to live with," she said. "It puts a knot of fear in the bottom of our stomach."

Many of the civic leaders express concern that joblessness has increased class differences in Rockford.

"We've established a two-party system here--the wealthy and the poor folks; and the working man is just the high end of the poor folks' ladder," asserted Duane Schneider, board member of United Auto Workers Local 529.

Those who have jobs don't advertise their good fortune. Several said they conceal new purchases and don't tell friends about their vacations.

"We tend to feel guilt at going out and spending money in a town where so few in Rockford can do so," said one doctor's wife.

Julie Endres, 26, said she and her husband were uncomfortable shopping for their first house this spring because so many of the homes were being foreclosed. "I really felt relieved that for the home we finally bought, the couple is retiring to go to Florida."

The black community has been particularly hard hit. "It's always worse for us, as though we're not Americans or something," said Margie Sturgis, editor of the Midwest Observer, the city's black newspaper, which is closing in two weeks for lack of support. "The people who can afford to help poor blacks in this city don't."

"There's no such thing as equity," said Derrick Davis, 33, music director at the AME Church, the oldest and most conservative black church in Rockford.

In many Rockford families, like that of Steve and Connie Manarchy, traditional roles have been reversed, with women finding minimum-wage jobs to keep the family afloat and men tending the children at home, waiting for their $11-an-hour jobs to return. After Steve Manarchy was laid off from his $30,000 year job as a production foreman, his wife found a full-time secretarial job that pays $5.25 an hour.

"I started cooking, baby-sitting," he said. "You feel worthless."

Although one of Rockford's most cherished traditions is its rejection of federal assistance, that aid, in fact, now represents the most substantial help available. The recently signed federal jobs bill will provide $500,000 for construction and health projects; $700,000 is coming to Rock Valley Community College to retrain unemployed workers, and $130,000 in Federal Emergency Management Agency money will be spent on emergency food and shelter.

In Rockford, that money is welcomed. It is almost never acknowledged as part of the "federal handouts" that citizens so routinely criticize. CHAPTER III: The Economy

"December 17, 1982, was the first day I ever got out of bed and didn't have a job since I got out of high school in 1955," said Gene Day, 45, who for 15 years worked for Borg-Warner Corp., making clutches for trucks and farm tractors.

"This has been a pretty steady job," he recalled. "Used to be you got three years in, you figured you were solid for life. I don't ever remember a recession. This is the first time I was ever laid off."

But last December the recession that has washed away 15,900 Rockford jobs in three years caught up with Gene Day and added his name to the list of unemployed.

Losing a job has become a rite of passage in Rockford. When Rockford led the nation in unemployment at 22 percent last winter, virtually everyone in town could count a neighbor, a relative, a friend or a co-worker among the jobless.

The pervasive layoffs have taught factory workers like Day and many others in Rockford that this is no ordinary recession. The executives handing out layoff notices know better than the workers that many of these jobs will never be filled again. In the midst of the worst downturn since the Great Depression, Rockford's factories are investing millions in new technologies that will radically alter not only the city's economy but also the life styles of the 40 percent of its workers who depend on manufacturing jobs.

The survivors among Rockford's 680 manufacturing plants are likely to be not just those fortunate enough to live through this recession, but those that have faced head-on the choice between extinction and evolution. Lasers, computers and space-age plastics are reshaping the manufacturing processes of the city's industries in much the same way that cheap imports, Third World labor and the recession are changing life for Rockford's workers.

Like a fever chart tracking the health of the local economy, Rockford's unemployment figures show the city is improving but is still a long way from well.

Rockford came off the list of the nation's worst unemployment areas when the Chrysler Corp. plant in suburban Belvidere went back to work, knocking 3 percentage points off the unemployment rate. But joblessness has hung at 16.8 percent here while the rest of the country is down to 10.1 percent.

Even if the economy grows about 5 percent this year as the Reagan administration now projects, it would take two years or longer for Rockford's employment to return to pre-recession levels.

Each day last year, two dozen Rockford area residents lost their jobs. In 12 months, 8,700 jobs disappeared, many forever. The work force, which has been shrinking since 1979, is down from 123,000 workers to 107,000. Like an avalanche, the 6,600 jobs lost in factories tore still more work out of the local economy; stores, services and offices cut staffs, eliminating 2,100 more jobs.

The lost jobs drained $250 million a year from Rockford's economy, estimates Charles Sinclair, local economist for the Illinois Bureau of Employment Security.

Along with the unemployment rate, business and personal bankruptcies rose in the last three years, although much of that is blamed on bankruptcy law changes that went into effect just as the recession hit.

However, Bankruptcy Judge Richard DeGunther says he's seen one trend that is clearly not due to the liberalized law. More and more people who filed for personal bankruptcy and arranged to pay off their debts over a long period of time are coming back to court again because they've lost their jobs and no longer can make even minimal payments.

If Rockford's workers took it on the chin last year, their labor unions suffered body blows. Though it is very much a blue-collar city, Rockford has never been a union town; only one factory worker in five carries a union card.

The recession--particularly in the auto industry--pushed the unions into a corner. Members were forced to choose between their wage scales, work rules and benefits--and their jobs. Most chose the jobs. Workers at Chrysler's Belvidere assembly plant set the pattern by making concessions when the company was on the verge of bankruptcy. The building trades agreed to freeze their pay for a year and rewrite longstanding work rules. Then the National Metalcrafters division of Keystone Steel and Wire moved three of its plants out of town and demanded that the remaining workers give up $3.85 an hour in wages and benefits, provoking a strike.

Sunstrand Corp., an aircraft components maker that is the area's second-largest local employer, gave its unions a similar ultimatum: take pay cuts of up to 30 percent or Sunstrand would move to the Sun Belt.

I didn't try to sell it" to the membership, said UAW local President Dan McDonald. "I told them this is what it takes to keep this work in Rockford . . . ."

The pattern of pay concessions is perverse: the highly skilled, highest-paid workers--the blue-collar elite machinists and technicians--are largely exempt. The unskilled workers--already the lowest paid--were asked to give up the most because, as one worker put it, "they can hire a guy off the street to sweep floors for six bucks; they don't have to give $10 an hour."

That pattern not only creates ominous tensions within Rockford's factories, it also foreshadows profound changes for American manufacturing workers. Skilled workers who can run a computer instead of a pushcart are what the factory of the future needs. The unskilled whose job is to pop a piece of metal into a machine or bolt a part on a car will have to compete with Sun Belt or Third World workers who will labor for much less than UAW wages.

That will mean steadily fewer of the $10- or $12-an-hour jobs that pay for a neat home in the Rockford suburbs, a new car every few years and maybe a boat or a camper in the driveway.

"The old American dream of the '50s has been realized here, and it's slowly crumbling because the checks aren't coming in anymore," said Glenn Turphoff, who runs the Northern Illinois Building Contractors Association. "The ability to work with your hands was the cornerstone of this town," he added. "There just aren't as many hands needed anymore."

The massive transition under way in Rockford's factories affects everyone, from Amerock Corp., which makes drawer pulls, knobs and cabinet hardware for Hechinger's, to Barber-Colman Inc., whose computerized control systems manage the heating and air conditioning at the East Building of the National Gallery in Washington.

To wean itself from the home-building industry, Amerock's owner, Anchor Hocking Inc., is converting one of its Rockford hardware factories to make microwave cookware. But even the new operation will not require a work force as large as Amerock had before the recession, said Vice President James Waddell.

Ex-Cell-O, one of Rockford's biggest machine tool makers, has terminated 500 people and closed two plants, but has invested millions in new facilities.

"We've been through very trying times, but in the long run it's probably beneficial," said Thomas H. Powell, president of Ex-Cell-O Manufacturing Systems Co. "It has probably made us a stronger competitor."

But Powell said it will be 1984 before customer orders return to pre-recession levels, and 1985 before production is back to normal.

A few blocks away, workers at National Metalcrafters and Borg-Warner complain that they are working on World War II vintage machinery that in some cases is older than they are.

Obsolete equipment--and often management to match--is the most insidious internal problem facing Rockford's smokestack industries. The greatest external threat is foreign competition. Imported machine tools are gaining a toehold and imports are a double-edged threat to Rockford's fastener plants.

"We make nuts and bolts, and damn few of 'em are used in Datsuns and Toyotas," said Stan Meyers, president of the UAW local at the National Lock fastener plant.

Foreign cars are seen far less frequently on the streets of Rockford than in Washington, and imports are banned from the UAW parking lots. But outside the union halls there is surprisingly little demand for protectionism.

"Imports? Ship 'em. Let 'em bring 'em over here. We've got to learn to compete on a worldwide basis, and that will hurry up the process," said Lou Bockrodt III, head of Rockford's biggest auto dealership.

"If we have to work for less to compete, I guess we're going to have to work for less. If we have to sell for less to compete, I guess we're going to have to sell for less. We got to make it more efficient to compete. We're going to have to do it." CHAPTER IV: The City

Last Columbus Day, Mayor John F. McNamara went before the City Council and, in sweeping rhetorical terms, told his city that "these drastic times require new and dramatically different approaches."

Like Jimmy Carter after his Camp David retreat in 1979, McNamara, 43, was harsh on himself and his constituents: "We as a community must bear responsibility for our current economic crisis. It is our fault--individually and collectively. We have failed to lead."

Like Martin Luther King Jr. at the Lincoln Memorial in 1963, McNamara, a liberal Democrat, had "a dream: to make Rockford a city where my children and yours will want to live--and will have a job so they can live here."

Like John F. Kennedy at his 1961 inaugural, McNamara, a Bronze Star veteran of Vietnam and former public defender, asked everyone in his city to think about what he or she could do for Rockford: loans and investments from banks and pension funds; joint development plans from labor and business; new training efforts from schools.

At the center of the drive, he pledged, would be an activist local government, bolstered by new taxes.

"Insuring jobs for our people is a responsibility of government," he said, "not as the employer of last resort, but in making sure Rockford is a good place to do business.

On April 12, six months after it began, McNamara's New Frontier of governmental activism was cut off at the knees. Voters passed a referendum stripping the city government of its home rule powers under the Illinois constitution, and mandating an immediate $8 million rollback in property taxes and a 16 percent cut in the city's operating budget.

It was, McNamara acknowledges, "a very wrenching" rebuke to his ambitious plans--but not to him alone. McNamara's strategy had been supported by the Republican City Council and the Chamber of Commerce. The local newspaper and all 10 of the citizens ranked most influential in a radio listener survey--business, labor, political and community leaders--backed McNamara in the fight to retain home rule.

But the revocation carried by a 54 percent majority, showing a confidence gap that surprised much of Rockford's establishment.

Chad Brooks, the veteran editorial page editor of the Rockford Register Star, expressed the shock of most of the city's leadership at the vote, saying that after all his years in town, "I feel that I've just dropped in from the planet Mars . . . . All of the rules have just been changed."

Those who believe that something like the McNamara plan is essential for Rockford's economic rebuilding effort are despondent. Critics of home rule, on the other hand, hope Rockford can attract business by cutting taxes.

In either case, what the voters seemed to be saying when they clamped their wallets shut on home rule was that in a time of austerity, Rockford is not looking for venturesome government--and certainly not for expensive government.

John Gile, a 38-year-old print shop owner and ex-reporter who led the fight against home rule, describes himself as "one of the Kennedy children. I believed in the Great Society and cast my first ballot for Hubert Humphrey." But he shifted his children from public to parochial schools four years ago "because of the 'Johnny can't read' problem" and voted for Reagan.

At the heart of the home-rule repeal was a protest against the doubling of property taxes in two years, as the recession stripped the city of other sources of revenue. Beyond a tax revolt, Gile said, the home rule repudiation was a protest against political leadership that assumed a "we-know-best" attitude toward its citizens. Gile's brother-in-law, Illinois Associate Circuit Court Judge Paul A. Logli, strongly supported home rule but says he can understand its defeat.

"It reminded me of the people in 'Network' who opened the windows and shouted, 'I'm mad as hell and I'm not going to take it anymore,' " he said. "They talked about the parking meters that were put in after the war that people never voted for; the new courthouse built in the '60s that people never voted for; the Metrocenter convention center they never voted for. I think it was frustration; they felt government was out of control."

When a similar sentiment swept eastward from California in the 1978 Proposition 13 tax revolt, it presaged Reagan's election as president. But when that sentiment is translated to the national level today, it collides with an important aspect of Reagan's program: the military buildup.

Lou Bockrodt III, an auto dealer, is still a Reagan supporter though economically "this has been a very painful president for me." But because he believes "they gotta get those deficits fixed . . . and I don't think they can raise taxes," he would "stretch out" the defense buildup. "What the hell's the difference, if we end up with a nuclear holocaust anyway?" he said.

Historically, Rockford's economy has not been tied to defense contracts, but that is beginning to change--particularly at Sunstrand Corp., an aircraft components maker. Randy Lindgren, a board member of the UAW local there, points at the stencil of a B1 bomber on his T-shirt and observes, "One of the biggest things we're leaning on right now . . . is this . . . . It may sound selfish, but it's got to start somewhere, and if we can't provide it economic stimulus on a commercial basis, then we have to produce it on a military basis."

Former congressman and presidential candidate John B. Anderson says that when he visits his father and sister in Rockford, he finds "the people who are unemployed are very bitter about Reaganomics, but it is amazing to me that when you talk to the average small-business man, he's somehow still willing to give Reagan a little more rope . . . . I think probably there isn't any real confidence on the part of these people that the Democrats they have seen have any better answers . . . ." CHAPTER V: The Outlook

Bill Bowen sat in his principal's office at East High School, built by WPA funds during the Depression, while a midwestern thunderstorm punctuated his words with sheets of rain on the windows.

"Rockford, Ill., has not received a knockout blow," he said. "I think we've got a pretty good, swift punch in the gut, and it hurt, but we're not out. And I think the country's got hurt. If we don't know enough to start reassessing, I don't know what will happen. We'll be less of a world power; that's for sure.

"Ever since I've been alive we've been it, you see. Knew it!. . . We always knew we would come out on top. We always had that. We always knew that. And now there's doubt."

His concern about what has happened to Rockford, and America, involves much more than questions of economic recession and recovery. It underscores the dominant theme that emerged in a week of conversations here: The United States has entered a new, tougher era, one requiring different approaches and attitudes.

The problem for Rockford, and perhaps the country, goes far beyond a recognition that present economic problems are not going to be solved easily. The tension comes from clashes between basic American values that are so typical of this city--between a desire to have more and a willingness to settle for less, between gratifying immediate needs today and accepting necessary changes tomorrow.

These conflicts are visible everywhere: in debate over improving public schools and in reluctance to pay for them; in the vote to strip home rule powers from the city and in the recognition that better city services are necessary for citizens' basic needs.

"I think most people believe things are not going to be the way they were," said Hugh Hammerslag, a businessman active in efforts to improve public education. "And yet you see groups of people who are fighting very hard to hold onto what was, even though it's already gone."

The frustrations, the sense of Rockford's "thrashing around," as more than one person put it, in its search for a clear direction, are omnipresent.

"We don't know where we're going," said newspaper editor Chad Brooks. "We're latching onto the high tech, but there's no hard answers there. There's a tremendous frustration . . . .

"This was a community that celebrated the Reagan election enthusiastically, a community that really thought all it had to do to solve all our problems was elect Ronald Reagan and everything would be wonderful. And when it didn't happen, when it resulted in the recession with Rockford all of a sudden having the highest unemployment of any community in the country, a lot of faith and confidence was shattered. That hasn't led to a lot of bitterness about Reagan. It has led to frustrations of being unsure where the answers are."

The transition from the uncertain present to a more assured economic future will be neither quick nor painless. Fundamental problems have yet to be resolved. They involve such critical aspects as how to retrain--and for what to retrain--middle-aged blue-collar workers; how to preserve both social and economic equity for all of Rockford's citizens; how to provide excellence in education so the next generation can better compete; how to move from a heavy manufacturing economic base into different sorts of jobs for the 1990s.

Striking an optimistic note, Mayor John F. McNamara said: "Rockford, while it may end up being different, has every opportunity in the world of being better than it was. When you look at the quality of the people and the quality of the community, there's no reason why we can't do it."