By Don Bolding

Killeen Daily Herald

The end of 2008 found most local business and economic leaders biting their nails over how the economy has performed in the last part of the year but looking forward to a renewal of troop strength at Fort Hood, to an expected easing of credit at some point and to the settling of the national political situation with the presidential inauguration and new policies.

As usual, though the local situation is influenced by the national downturn, its straits aren't nearly as dire.

Nationally, optimists about the economy are expecting a turnaround about the middle of the year, although casters of worst-case scenarios believe all of 2009 might be troubled with double-digit unemployment, great declines in demand and persistent deficits.

More than anything else, although the national economy is bound to have an effect here, the stabilizing force of Fort Hood greatly reduces the gale-force winds that might affect the rest of the country. The worst problem might be the pessimism that news of the rest of the nation causes.

But up until now, retail sales across the area are only about 5 percent flatter than they might have been without the recession, and while retailers elsewhere have reported dismal sales, local stores have reported reasonably good traffic.

Auto dealerships might be the hardest-hit segment. Home sales through October are down 9 percent from 2007, but Realtors forecast an end to that.

John Crutchfield

Greater Killeen Chamber of Commerce president John Crutchfield said, "I think we'll see an upswing about the middle of the year, probably before the rest of the country does, and we expect things to stay fairly strong until then. Sales taxes are down a little, and enplanements at the airport flattened a little, but we anticipated that, and it hasn't been bad.

"Troop strength at Fort Hood will be down for a while with the 1st Cavalry Division getting ready to deploy, but the numbers should come back up soon.

"The election had an unnerving effect. I think things will get better when it's more clear what the government will do. And the government should let the economy take its natural course. If they keep spending money they don't have and printing more money, they'll aggravate inflation. If they stop that, things will straighten out faster."

He said he expects a major new retail development in the first part of the year, but the contracts are not signed yet.

Ed Mullen

Harker Heights Mayor Ed Mullen said, "The economy is driven almost totally by demographics here. With fewer troops during the first of the year, a lot depends on whether the families stay here. But housing will probably stay flat. Retail sales will probably stay about the level they are now, although sales were up about 30 percent in Heights in November."

Steve Carpenter

Heights City Manager Steve Carpenter pointed out that the city's 200-plus residential building permits and $45 million in commercial permits amounted to about $100 million in new permits for the fiscal year.

"I'm a little nervous about the short term but optimistic for the long term," he said. "There's still a lot of space to fill in Market Heights and along Farm Road 2410, but we're still getting permits. I think everyone is waiting for credit to ease up a little."

Ted Smith

Harker Heights Chamber of Commerce board chair Ted Smith of Ted Smith Law Firm echoed others in saying that most doldrums in the local area are due to pessimism induced by the national situation but noted some commercial vacancies in the area. He believes that once troop levels return to normal, much of the problem will be abated, but he's nervous about any more federal bailouts in the market as counterproductive.

"We had a good holiday season, and if people can feel good about normal spending, we're a capitalist economy and that's what makes it run," he said. "We have to wait and see what Obama will do, but I'm nervous about a new trillion-dollar stimulus package."

Billy Jay Mills

Billy Jay Mills of Modern TV & Appliance in downtown Killeen said his sales for 2008 increased over 2007.

"This area is typically several months behind the national trends, but things for this store have been surprisingly good," he said. "If it keeps on like this, I think we'll be fine."

Modern's business is split between showroom sales and installations in new homes, among other endeavors. "We're diversified and count on one kind of operation balancing another out," he said.

Jerry Conner

Copperas Cove Economic Development Corp. executive director Jerry Conner said, "I'm an optimist, but wonder whether we'll see a turnaround by the middle of the year. I think it's going to take about a year because we may not have seen the other shoe drop. And a lot of the local perceptions and behavior depend on the national news and people seeing their retirement funds drop. We may see some more stores closing. But in Cove, we have a new $7 million entertainment center, and that's leading other new developments we're expecting next year. We have a lot of military retirees with their steady paychecks, so we're insulated."

Mardi Redlin

Marketing director Mardi Redlin of Killeen Mall said that Christmas figures haven't been tallied but that retailers in the mall have been telling her that holiday sales "met their expectations. My impression is that it was a pretty good holiday season."

Coleen Beck

Union State Bank president Coleen Beck was pleased when she heard about the retailers' good reports. She said the banking business is slow now, "but I think it's just because of fear generated by the national situation. We don't have those problems in Texas, and certainly not in Central Texas. One good thing, though, is that people are starting to save money and putting a stop to unrestrained spending. We need that, even though the community banks have stayed healthy and have money to lend without federal aid. I say again that people need to do business on Main Street and not Wall Street."

She thinks the economy will remain slow through the second quarter of 2009 and then start to pick up.

Jose Segarra

In real estate, ExitHomevetsRealty owner Jose Segarra, who acts as spokesman for the Fort Hood Area Association of Realtors, said, "Some people are looking for better deals than are available on foreclosures. Others are hoping the interest rate will go down some more, although it's already great at 5.5 percent.

"We know that some potential homebuyers were waiting to get Christmas out of the way before they resumed shopping for homes."

Home sales tend to taper off at the end of the year, but they plunged from 170 in October to 137 in November in the multiple listing service in the association's area, and last November's sales totaled 225. However, the average price has been up at least a couple of thousand dollars every month, compared with the same months in 2007. In November 2008, the average price was $127,697 compared with $117,752 in November 2007. Segarra said this is due to Realtors "squeezing" the price to raise it as high as possible so that people who have to sell without much equity can realize a little profit. People faced with selling "short" may be those in financial binds for various reasons or soldiers facing deployment.

"We don't have many people going into real estate sales right now," Segarra said.

"National news has an effect and tends to stop people from any big plans until they see what's going to happen. Some potential sellers are holding back, hoping conditions will improve." But he thinks things will get better when Fort Hood's troop strength recovers and when it's clear what the government will do.

In the meantime, he and his team are spending more time outdoors to discover what's on people's minds.

Dick Young

Former Killeen councilman Dick Young, owner of Big Daddy's Ol' South Barbecue and Xtra Thin weight loss center, believes it will take 15 to 18 months for the economy to get all the way back on track. "But there's no place I'd rather be right now than Killeen," he said. "People are acting out of fear just because of national news reports when there's not much of a problem here."

He said he notices that many people who might otherwise spring for an Ol' South three-meat special now settle for sandwiches. "They haven't stopped coming in; they're just counting their money," he said.

"One thing I see is because people have cut spending way back, some small businesses that started on a shoestring are closing. But I think it's a hard lesson that will make them better business people if they try again."

Bill Parry

Heart of Texas Defense Alliance executive director Bill Parry said the number of soldiers will fall slightly under 40,000 as several 4th Infantry Division units return just as the 1st Cavalry Division is deploying.

As the 4th Infantry Division units return, the population will increase until it reaches about 50,000 by May.

Then some 4th ID personnel will leave for Fort Carson, and some will stay at Fort Hood. Variables lie in how many soldiers will elect to stay with units at Fort Hood and how many families stay here.

"School enrollments will tell us how many families are leaving," he said, but overall, about 4,000 troops are expected to leave later in the year. Still, troop strength will return to something like accustomed levels, and Lt. Gen. Rick Lynch, III Corps and Fort Hood commander, has pledged to support keeping the fort's population at or near its capacity of 50,000.

If a nationwide recovery from the recession starts in the summer and troop levels return to normal, then current local problems should be well on their way to healing. Even if there's more trouble in the works, Central Texas still has a seawall that will mitigate the crests and troughs.

Contact Don Bolding at or (254) 501-7557.

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