Credit crunch comes home to Triangle

Here's some good news: The stock market is closed today.

It's a break from a horrifying week on Wall Street marked by record declines that erased more than a trillion dollars in investors' wealth.

But it's only a temporary lull in a global economic storm that is slamming the once-robust North Carolina economy and its strongest regions.

In the Triangle, layoffs are mounting, and companies are delaying expansion. In Charlotte, residents and businesses are gripped by uncertainty as they await the fate of 20,000 Wachovia workers after the Wells Fargo purchase.

The challenges have tempered optimism that North Carolina would experience a milder downturn than the rest of the nation. North Carolina -- and the Triangle in particular -- did avoid the worst of the housing market plunge. But the worldwide credit crunch is too broad for any area to escape. The economic pain is coming home.

"There's no question the state is facing some difficult times," said Mark Vitner, an economist with Wachovia in Charlotte. "It's not going to be fun."

Charlotte, the nation's second- largest banking center, could bear the brunt of the financial meltdown, a possibility that would have big ramifications for North Carolina as a whole.

The three urban centers of the state -- Charlotte, the Triangle and the Triad -- are the main engines of North Carolina's economy. Charlotte and its suburbs account for more than a fifth of personal income in the state.

A slowdown in Charlotte will cut tax receipts. And that will hurt a driver of the Triangle economy: government.

Gov. Mike Easley has called on state agencies to reduce their budgets by 3 percent in recognition that tax revenue will likely decline.

So far, the Triangle has held up better than the rest of the state and most of the nation.

A recent analysis by Moody's Economy.com found this region to be one of 56 metropolitan areas still growing.

But it is weakening.

In the past two weeks, Sony Ericsson, a mobile-phone maker, announced more than 400 job cuts in Research Triangle Park. The pharmaceutical giant GlaxoSmithKline said it will cut 850 jobs in the U.S. and the United Kingdom, an undisclosed number of them in RTP.

Guilford Performance Textiles will close a Fuquay-Varina plant and put as many as 115 out of work.

"The North American auto industry, a core business unit for Guilford, has been hit hard by the current economy," Chief Executive Shannon White said in a statement. Higher energy costs, tightened credit and a pullback in consumer spending have combined to cause "a significant drop in automobile sales."

Even businesses that haven't shut down or resorted to layoffs are modifying their operations.

Rocky Top Hospitality, which owns several popular Raleigh restaurants, including Bogart's American Grill in Glenwood South and Twisted Fork in Triangle Town Center mall, changed menus at three eateries last week to include lower-priced items.

Dean Ogan, the owner, said customers' responses to his comment card program stress that they want a good product at a modest price.

"The biggest thing I see everywhere is the word 'value,' " he said. "Two years ago, that was never a question."

Recovery in '09?

There's general agreement that the nation is now in recession. By some estimates, the economy could start recovering by the middle of next year. Others say it could be 2010.

The length and depth of the slowdown will determine the full effect on North Carolina.

One thing is certain, though: People in different industries will have different experiences.