Local business leaders took stock of the troubled economy on Thursday, looking ahead to a difficult year and bracing themselves for the uncertainty to extend into the second half of the year.
The business outlook summit, organized by the Nashville Area Chamber of Commerce, painted a dismal picture, with all local sectors from residential construction to retail affected by the economic downturn.
"It looks like there is no discernable bottom in sight," Dave Altig, senior vice president and director of research for the Federal Reserve Bank of Atlanta, said to the business leaders gathered at Belmont University. "Right now, virtually no one is optimistic about the outlook going forward."
Analysts said the economy probably will turn around when the housing market improves — but when that will be is anyone's guess.
Closings on single- and multi-family homes, condos and land declined 29 percent in 2008 compared with the previous year, according to the Greater Nashville Area Association of Realtors. And office space deals are closing at a slower pace — an average of 60 days versus 30-45 days before the slowdown, brokers say — because financing is harder to come by.
"We're always looking for a light at the end of the tunnel," said Robert "Tim" McGee, director of macro strategy and research for U.S. Trust, Bank of America Private Wealth Management.
But he cautioned: "Sometimes that light at the end of the tunnel is the train coming at you."
Bargains are soughtConcerns about money, income and finances, as well as a weakening economy, have pushed shoppers to scour the ads for the best deals and spend only on necessities, said Glen Gabardi, Wal-Mart's vice president and regional general manager for Tennessee.
At the stores he oversees, fewer shoppers are using credit cards and more are buying store brands, he said.
"She wants to feel like she is making a smart choice," Gabardi said of a typical Wal-Mart shopper. "She wants to pay as little as she can."
More than ever, he said, consumers are looking for bargains — comparison shopping and doing research online before ever setting foot in the store.
And they're looking for convenience.
Low-cost, high-value Wal-Mart has even turned to free valet parking at one Nashville store to keep customers happy.
The service was added four months ago at the 5824 Nolensville Pike location, said Wal-Mart spokeswoman Anna Taylor. To accommodate a creek in front of the store, the main parking lot is divided into segments, and most customers have to walk across one of several bridges to enter the store.
"It's just an added convenience, an added service to our customers to make the shopping experience more convenient to them," Taylor said of the service, available Fridays, Saturdays and Sundays.
Consumers in controlThe change in consumer psyche will affect the way businesses conduct themselves in the future, local business leaders said. No longer will consumers be able to get extra spending money out of their homes, and businesses will have to try harder to appeal to consumers, some leaders said.
"We no longer have a consumer economy that is waiting for your next product to come out," said David Bohan, founder of Bohan Advertising/Marketing.
Not even the health-care sector, often considered a bright spot, is immune.
Larry Kloess, presidentof HCA TriStar Health System, said underinsured patients are becoming a greater issue, as people with health insurance are unable to keep up with higher deductibles. Some workers are putting off surgeries because they are fearful they will lose their jobs, he said.
Despite the dour news, summit attendees like architect J.P. Cowan with Thomas, Miller & Partners, LLC, said he's hopeful Nashville's economy will turn around sooner than the national average.
Nashville's diverse economy, high quality of life and other factors that attract businesses place Music City in a better economic position to weather the storm, he said.
"I'm optimistic."
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