A few steps from the corner of Jefferson and Main in downtown Peoria, a brokerage sign flashes stock-market data in big red numbers. It's noon and the Dow is nose-diving again. But the lunchtime crowd takes no notice.
It's not that Main Street has ignored the foul wind blowing from Wall Street. It's just that out here in the heartland, jobs and income usually matter more.
Yes, the downturn has slowed this Illinois economy a little. But nothing not accounting scandals, corporate fraud, or the red ink flowing in so many portfolios has dimmed Peoria's long-term outlook. "So far, people are still optimistic about the future," says Bernie Goitein, a Bradley University professor who tracks local consumer sentiment.
"My inclination is to go back into the market," says corporate executive Roy Endres, who has lost at least a quarter of his net worth.
There's no question that Main Street's ties to Wall Street grew stronger during the 1990s. At last count (in 1997), nearly half of American families owned stock or mutual funds up from a third in 1989. But that still leaves millions of Americans, including restaurant worker Monte Kruzan, without a direct stake in the market. "It doesn't affect me," he says, glancing at the flashing brokerage sign in downtown Peoria.
Yet finances are on everybody's mind. A month ago, real-estate developer Bob Wilkins was having his teeth cleaned when his dentist asked for help. He had pulled all his money out of stocks and wanted to invest in something more rewarding than a money-market fund. Mr. Wilkins found him an apartment building that the dentist is now considering.
"People are taking money out of stocks and moving it into their personal homes," says Wilkins. As a result, his business has prospered. So far, sales are hovering only about 5 percent below his best year ever.
People's biggest concern here: the string of corporate and accounting scandals. "The Enron thing and stuff like that are very much a concern to anybody who works for a large corporation," says David Chapman, president of the United Auto Workers local representing Caterpillar unionized workers.
As the region's largest employer, Caterpillar holds huge sway over Peoria's economy. Despite weak markets, the manufacturer of construction equipment and engines forecasts a profit this year.
While things are not all rosy among Peoria's companies (a mail-order firm has closed its doors, and foreign competition nearly put the local steel plant out of business), the current downturn pales in comparison with the early 1980s. Then, high interest rates and foreign competition decimated both Caterpillar and Peoria.
"What we had in the '80s was a wrenching, chance-of-dying type of period," recalls Roberta Parks of the Peoria Area Chamber of Commerce. "People were taking their keys to the bank and leaving them" because they could no longer afford the mortgage payments.
Professor Goitein's index of consumer sentiment registered 53.6 percent in mid-1982, a low that Peoria has not reached again. Since then, Peoria has lessened its reliance on Caterpillar by diversifying into medical and business services. In Goitein's latest report, released last week, sentiment was at 96.1 down from the go-go years of the late 1990s, but hardly pessimistic.
"I'd like to call it a leveling, an adjustment," says Karen Whalen. Her employer, National City Bank, is enjoying its best year in recent memory. But her husband's graphics and display company has seen a slowdown.
Last fall, to the hilarity of her friends heavily invested in stocks, she invested in a bank certificate of deposit (a savvy move in retrospect). Still, the market's fall hasn't soured her appetite for stocks. "We wish we would have more money to put in the market, because we're young. We have 20 more years to work."
Sheila Ogilvie, principal of Kingman Primary School in the city's poor north end, doesn't have that luxury. She plans to retire in two years. While her teacher's pension is unrelated to the swings in the market, her additional stock investments have tanked.
But they haven't fallen to the point where she would have to continue working. "I'm not there yet, but it's frightening," she says.
Many Peoria residents go out of their way to avoid the bad investment news. "I haven't opened my 401(k) statements in over a year," says Arlene Happach, executive vice president of Children's Home Association of Illinois.
"I have, and I wish I hadn't," chimes in Jim Sherman, president of Children's Home. This social-service organization in Peoria has seen private giving continue, but since 90 percent or more of its money comes from government contracts, Children's Home faces substantial cuts. For this fiscal year, it expects to lose $400,000 to $600,000 of its nearly $19 million budget and some 13 full-time positions out of a staff of 420.
The main problem: Illinois faces a severe budget crunch, because the downturn in the economy and Wall Street decimated state coffers. In addition, Peoria's city council is discussing how to meet an expected $4.9 million shortfall. One possibility: laying off 75 city workers.
Yet in some segments of the private sector profits are rolling in. "Our retail continues to be very healthy," says Diane Oberhelman, who is developing an upscale outdoor mall due to open in Peoria next April. Of the dozens of store chains she's negotiating with, only a handful have backed out because of financial problems.
"The stock market's ups and downs have not deterred people from buying luxury automobiles," says Tom Whitten Jr., general manager of Lexus of Peoria. From January to July, his store has seen sales climb 16.3 percent in comparison with the same period last year.
If economic downturns have a silver lining, it's the lessons they teach. In the 1980s, Peoria learned to diversify. And this time around? "You can't be on top of the mountain all of the time," Mr. Whitten says.