An unfortunate sign of difficult economic times, the shuttered store front, has cast a large shadow over Pagosa Springs, a shadow that grows with the imminent closing of Circle T Pro Lumber and Hardware.
However, the demise of the establishment, a prominent Pagosa area feature for more than 25 years, represents more than just another victim of harsh economic realities. As the largest local provider of building materials, the closing of Circle T at its Put Hill location could be considered as a barometer of the area’s general economic health.
The immediate impact will be the loss of a business that had over $8 million in sales last year, as well as the elimination of 18-20 local jobs, said Terry Smith, owner of Circle T.
“We’re going to move some of our people to our uptown store but obviously, unfortunately, we can’t keep all of them,” said Smith.
According to Bo Warren, general manager of Circle T, the reason for the store’s closing is “strictly economic.”
“The economy here has gone south,” Warren said. “We’re not seeing any major building projects for this year and no plans for anything big in the near future.”
In fact, local residential construction has slumped considerably this year. According to Sherrie Vick, building permit technician for Archuleta County Building and Planning Department, the county has received only three permit applications this year for new single-family homes (with an additional three applications for modular homes). The county has received a paltry 27 permit applications for 2009 (most for remodels or renovations), with only one new commercial project permitted so far this year.
Likewise, the Town of Pagosa Springs has seen a dearth of applications for new single-family home construction permits, with just one application received by the town’s planning and building department this year. “And that’s a small project,” said town building official Scott Pierce.
The town has received a total of 11 permits for the year, with six commercial remodels, two residential additions, and two new commercial projects permitted.
“April is holding no promises and we don’t know of anyone looking to get permits,” said Warren. “March permits are for May/June projects,” he added, “and I don’t know anyone who is looking to start anything within the next month. Local contractors and builders, they’re all trying to scrounge for anything they can get and it doesn’t look promising.”
Smith agreed with Warren’s assessment, saying, “There’s no permits out there and I don’t see much in discussions we’ve had with our builders.”
“We dominate the market place,” Smith continued, regarding Circle T’s provisioning of local builders, “but if there’s no market place, it’s hard to dominate.”
Aside from the closing of Circle T, the paucity of building permits affects local businesses in other ways. With hundreds of local contractors, builders, laborers and construction workers scrambling to find employment, fewer dollars are available to spend with area merchants (or service providers) as unemployed workers struggle to provide even the most basic necessities and forgo spending for the purchase of luxury items or dining out.
Local merchants and restaurants are feeling the pinch in the same way their counterparts have been squeezed nationwide. The Commerce Department reported Tuesday that retail sales dipped 1.1 percent in March, the largest decline in three months. Consumer spending, which accounts for about 70 percent of total economic activity, is considered an important indicator of overall economic health.
Unfortunately, in an Ouroboros-like effect, any significant rebound in sales will require an end to the thousands of weekly layoffs contributing to expanding unemployment numbers. With a net total of 663,000 jobs lost last month in the U.S., pushing the unemployment rate to 8.5 percent (the highest level in 25 years), the economy shows little sign of recovery.
With an unemployment rate of 7.2 percent, Colorado was ranked 21st for unemployment in February — 29 states were worse off — and Michigan ranked last with a 12 percent unemployment rate. Archuleta County, however, reported an 8.7 unemployment rate for February 2009, up 3.2 percent from the same month last year and an increase of .5 percent from January.
Sadly, most economists expect unemployment to keep rising through the end of this year and well into 2010, possibly reaching as high as 10 percent by this time next year. Compounding the dismal news, last week the Federal Reserve revised projections from a January report that had predicted a gradual recovery from the prolonged recession in the second half of 2009 and accelerated economic growth in 2010. In the current assessment, the Fed predicted a continued downturn through the end of this year with only marginal gains in mid-2010.
The current recession began in December 2007 after a home mortgage meltdown triggered a global financial crisis, demolishing economic growth. With most estimates predicting this recession to be the longest downturn in the post World War II period, the Pagosa area will most likely see more jobs lost — and more businesses closing their doors.
For the employees and owners of Circle T, effects of the global, national and local economy are only too immediate and tangible. With a liquidation company handling the sale of current inventory, the inevitable and painful end is clear.
“We’re talking to a group about possibly re-opening,” Smith said, “so the closing could be temporary. But we really don’t know.”
The liquidation sale, starting today, is expected to last less than seven weeks.