Economic downturn takes a bitter toll in the region

A year ago yesterday, when gasoline prices in Virginia hit $4 per gallon, Kimberly Ann Calos wasn't worried.

The financial world was two months away from near collapse. The stock market soon would tank.

The government would take over insurance, banking and mortgage giants considered too big to fail. Employers couldn't hand out pink slips fast enough.

But Calos was about to get her real estate license and supplement her income as a resale shop owner in Petersburg.

The sagging economy aside, she sold five properties last year -- not bad for someone new to real estate.

Business screeched to a halt. People stopped shopping. A contract on a house that Calos thought she had sold fell through on the day the deal was supposed to close.

With gas prices in Virginia hovering at $2.50 a gallon this past holiday weekend, nearly $1.50 less than a year ago, Calos is a lot less sure of her finances.

She's three months behind on her rent -- and resorting to ingenuity to boost business and pay her bills. She put a "going out for business" sign in her shop window and slashed prices.

"People think I am closing, so they come in and end up spending a lot of money. With prices so low, they think if they don't buy now they'll lose out," Calos said. She's selling more items at cheaper prices to keep afloat financially.

What's more, she has a house under contract, and if this deal goes through, she will hand the commission over to her landlady, she said.

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The economic downturn hit with full force last fall, even though the recession officially was declared to have started in December 2007.

The trigger was higher fuel prices, which hit everyone in the pocketbook and not just at the pump. Increased transit costs led to a bump in prices for food, services and anything requiring transportation.

As gas prices crept up, a housing market artificially propped up by liar loans, subprime mortgages and over-inflated prices continued to deteriorate.

"There was a lot of nervousness," said J. Alfred Broaddus Jr., former president of the Federal Reserve Bank of Richmond.

Even those who were employed were nervous about keeping their jobs.

The economy has lost a net total of 6.5 million jobs in this recession -- and cuts still are being made.

Employers cut a larger-than-expected number of jobs in June, and the unemployment rate climbed to a 26-year high of 9.5 percent.

Companies, if they didn't lay off people, turned to other cost-cutting measures, such as cutting workers' hours and freezing and reducing pay.

"Last year, at this time, I was gainfully employed," said Gene Hite, 43, a former Qimonda employee who was let go in February by the bankrupt memory-chip maker. Severance was not awarded.

"You can't stew in it," said Hite, an equipment engineer technician and block captain for his Battery Park neighborhood in North Richmond.

"I am coping by staying positive, trying to find employment and I hope I land good. Faith is the thing that keeps me going."

Hite said he doesn't want to move from the area. "I've been here my whole life."

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Jennifer R. Parham said she hasn't been hurt personally by the economic turmoil. But she deals with it every day. She is director of women's ministry at Needle's Eye Ministries Inc. in Richmond, a nonprofit connecting the workplace to faith.

"We are working with folks who are losing their houses, who are filing bankruptcy and are wondering where their next meal is coming from," she said.

Paul Ryan said he tried to stay in the Richmond area after he lost his job in February as a regional vice president for Circuit City Stories Inc. The electronics retailer was liquidated.

"We lived in Twin Hickory [in western Henrico County] in a perfect little spot near a great grammar school and middle school -- a little nirvana," he said.

This past weekend, he and his wife and their two children left for New Jersey, where he accepted a job with The Vitamin Shoppe.

"It's not that there aren't jobs in Richmond. There are, but there was nothing in my world, so I had to cast my net wider."

Ryan was recruited by Circuit City and moved here from Mystic, Conn. "We relocated, adopted a child, I got promoted and we saw my company go away -- all in 18 months," he said.

Richmond was booming when the Ryan family arrived, he recalled. "It's a great place. All things come in cycles. It will come back."

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The Richmond area was hit with a triple whammy with the closings this year of Circuit City, Qimonda and LandAmerica Financial Group Inc., a title insurance company, all in Henrico.

Their demise came within months of Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, seeking bankruptcy protection, and Bank of America Corp. agreeing to buy troubled Merrill Lynch & Co. in a deal brokered by federal authorities.

The Dow Jones industrial average in one day lost 500 points, wiping out more than $700 billion in investment value.

A day later, the Federal Reserve Bank lent troubled insurer American International Group $85 billion in exchange for nearly 80 percent ownership of the company.

Meanwhile, Congress fought over details in the Troubled Asset Relief Program. The program was meant to purchase bad assets, such as mortgage-backed securities, but morphed into shoring up capital levels in exchange for stock rights and ownership.

Healthy banks were pressured by regulators to take the money. The credit markets froze.

Steven A. Foster, owner of S.A. Foster Electric Inc., a commercial electrical contractor in Henrico, said he lost three contracts because builders could not get financing.

Banks "went from a faucet that was wide open to one you couldn't get a drop out of," he said.

"Last year, it was the gas that was killing us," Foster said. "This year, it's tough to find work for the men. Now we are struggling, in my case, to feed 15 families, trying to make sure people have incomes."

Foster, who imposed a fuel surcharge in July 2008 when gas prices were high, has lowered prices and at times reduces work hours for his employees to keep from laying off anyone in his 15-person crew.

"I would say this year is probably more frustrating because you really cannot figure out where the market is going," he said.

As economists debate whether the economy will rebound late this year or early next year, Foster knows what he wants for his business:

"If I survive this year, I'll be happy."

Contact Carol Hazard at (804) 775-8023 or

Contact Emily C. Dooley at (804) 649-6016 or .