Melinda Watson's New Year's resolution: Spend less. She has always been frugal, but now she's very worried about the economy.
Her family cut back on holiday presents. They're traveling less and eating in more. And the Baltimore resident, a 52-year-old homemaker, is in school studying nursing to land a recession-proof job.
"We feel like we've really been conscientious about saving and planning, and in spite of that, we're feeling like we're going to have trouble keeping our heads above water," said Watson, who is concerned about retirement, health care costs in particular.
"I see more poverty and more need than ever before as well, and that's very sad," she said.
Many others are worried, too. More than half of Maryland residents polled by The Sun last week said they believe the state's economy is deteriorating. Only 7 percent of the 904 voters polled think it's improving. The survey has a margin of error of 3.5 percentage points.
Sharply rising costs for food and energy last year helped fuel the biggest jump in inflation since the recessionary year of 1990, the federal government said yesterday.
That means higher prices for consumers on top of rising taxes. Add markedly slowing U.S. job creation, slumping home sales, climbing foreclosures, defaults on subprime loans and a wildly fluctuating stock market, and it's not hard to see why people are feeling pessimistic.
One consequence: Consumer spending, the economy's biggest prop, is buckling. Last month retail sales fell 0.4 percent, making the holiday shopping season the worst in five years.
Rising costs are hitting local businesses, too, and they can't fully pass those expenses on to their increasingly penny-pinching customers.
Lutherville-based Stone Mill Bakery, which supplies wholesale bread to 150 hotels and restaurants, is facing skyrocketing prices for wheat. The bakery's flour costs have doubled, from $7 for a 50-pound bag to more than $14, said co-owner Alfred Himmelrich. But he has raised bread prices only 15 percent.
Even so, a restaurant chain just drastically cut its account with Stone Mill to switch to cheaper frozen bread, he said.
"If you talk to anyone in the food business, they're going to give you the same spiel," he said by phone from his Lutherville cafe during the lunch rush. The increasing cost of wheat and other ingredients "is at levels we've never seen, and it doesn't seem to stop."
Cost of fuel
