Consumers, leisure industry acknowledge recession concerns

Jun. 24—ELWOOD — While acknowledging that a wildly fluctuating stock market has eaten into some of their investments, Patrick Manship, Don Thomas, Barry Gaar and Bill Golden aren't ready to give up their weekly golf outing — at least not yet.

"I understand what's going on, but I feel comfortable in the future," Manship said as he waited to hit an approach shot to the seventh green at Elwood Golf Links. "I'm OK financially. I'll pay the gas prices and pray for our leaders, that they can make the right decisions."

Manship said he's made budgetary adjustments in other areas. His playing partners have cut back as well. Thomas said that while he still hits the links at least three or four times a month, he doesn't play as frequently as he did a year ago.

Consumers have for months been dealing with the highest inflation in a generation, record high gas prices and soaring costs for food, electronics and other everyday goods. They've also seen a stock market that has plummeted into bear market territory.

According to many financial experts, those troubling economic realities portend even worse news.

This week, a note from analysts at Goldman Sachs predicted a 30% chance of the U.S. economy falling into a recession in the next year.

They issued that forecast less than a week after the Federal Reserve issued its biggest rate hike, 0.75%, since 1994 in an effort to mitigate inflation, which was measured last month at 8.6%, the highest rate since the early 1980s.

Analysts from Deutsche Bank, Morgan Stanley and other investment firms have offered similarly dire forecasts, further unsettling already shaky markets and prompting economic leaders at the federal, state and local levels to scrutinize their budgets and look even more intently for savings.

"Certainly gaming could take a hit in a down economy as well as service industries for travel, especially with high gas prices," said Rob Sparks, executive director of the Corporation for Economic Development in Madison County. "Those sectors are probably the ones I'm most concerned about being at risk."

Sparks said he believes that in some ways, a recession may already have arrived locally. He pointed to recent record highs in the prices of building materials, including lumber, drywall and roofing shingles as evidence.

"I know people measure things differently, but I think history is going to show that we've kind of already been there."

Sparks acknowledged that unchecked government spending and a prolonged period of historically low mortgage interest rates — as well as lingering supply chain issues among manufacturers of a variety of goods — have helped create a volatile environment for consumers.

"We've accumulated a tremendous amount of debt in a short amount of time, and we've kind of artificially propped up low interest rates," he said. "That stuff's got to work its way through the system."

If or when a recession materializes, Sparks believes that the local economy's footing is stable enough to rebound quickly, regardless of how long the difficulties persist.

"I'm pretty optimistic about where we're going," he said. "The key thing I see is we still have a huge flow of projects in our area, maybe some of the highest that I've seen. I'm encouraged when the builders are saying they're seeing a stabilization of pricing."

Still, as consumers continue to make difficult budgeting decisions, businesses that depend on discretionary spending could be among the first to notice the effects.

Jake Hopkins, director of golf operations at Elwood Golf Links, said that while the golf industry enjoyed a robust increase in first-time players during the pandemic, that growth has begun to stall.

"It's a unique situation, because (golf) was one thing everyone was able to do, and then they kind of stuck with it and rolled with it," Hopkins said. "But it's starting to stagnate a little bit."

Hopkins noted that merchandise sales in the club's pro shop have tailed off recently and, like many other end-point retailers, he's dealt with lengthy delays in getting inventory shipped.

"It's been a little bit rough getting some things in," he said. "I'm still waiting on some orders that I placed in the springtime. They're coming in bits and pieces, but it's not like it was in the past where you get everything a month later, and it's there and ready to go. You have to plan accordingly."

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