Main Street Comes Out Of Its Slump, And Spirits Are Up

Few could blame June Hoey for being anxious. A single mother who's putting her third child through college, Hoey just learned she'll soon be booted out of the townhouse she has been renting. Recently, an accident with an uninsured motorist left her facing $700 in car repairs. If that isn't enough, Hoey is due to lose her $25,000-a-year job as a real estate analyst by yearend, when her employer's contract expires.

But Hoey isn't troubled: Despite mounting bills and limited savings, Hoey says she is "fairly optimistic about the economy.... Things have really turned around in the last couple of years. I don't know of too many people who have not been able to go out and find another job."

Hoey's attitude isn't uncommon in Dallas. Meander down Main Street in this city's downtown and you'll encounter a surprising uniformity of opinion: The economy here is so much better than it has been in years, folks say, that there's little reason to complain. "It's good here in Dallas. I've got a roof over my head, and I get a paycheck every week," says Vaughn Ingram, an MCI Telecommunications Corp. line locator working with his crew.

That outlook appears well-founded: Nationally, unemployment is down and inflation is low. The Dallas area, left for dead in the 1980s after its oil and real estate collapsed, has seen rebounds in construction, telecommunications, and health care. Unemployment dropped to 5.3% in April, compared with 6.4% nationally.

Even signs of slowing economic growth nationally don't concern Dallas. "The economy has been growing so drastically that it's due a little leveling off," says Dallas police officer Stan B. Hensley. "[But] there's no major recession. No one's panicking."

Just one thing, in fact, rattles Dallasites: higher interest rates. Mari Acker, an administrative secretary at accounting firm Martin W. Cohen & Co., says that she and her husband have been trying to save enough money to buy a home by the end of the year. However, "if interest rates keep going up, we'll have to reconsider and wait for them to come back down," Acker says.

SMALL TICKETS. Higher rates, indeed, have some consumers rethinking purchases of big-ticket durables. Purchases of clothing, home furnishings, and other, more modest goods, though, may be on the rise. Shelley Nunnery, a credit specialist at NationsBank Corp., is using credit cards to finance the redecoration of her home. She used to pay interest rates as high as 18% to 19% on her cards. "Now," she says, "I'm getting 11% to 12%." So she's planning to spend a little bit more.

But don't look for Nunnery or her neighbors to load up on debt, as con-sumers did in the '80s. They realize the economic pendulum could swing back at any time. Despite a strong economy today, "You could be out of a job tomorrow," says Traci Watson, a bank clerk. For now, in Texas and elsewhere, cautious optimism is the rage.

Before it's here, it's on the Bloomberg Terminal.