By Jason Mandell
Special to The Lookout

February 1, 2010 -- It’s bad but it will get better. That seems to be the consensus on the state of the local economy as retailers struggle with a stagnant economy that has so far shown little sign of recovery.

If 2009 was a tough year, 2010 brings a glimmer of hope, as the New Year kicked off with key sporting events that brought plenty of visitors to the beachside city, and will close out with a new Santa Monica Place open to the public.

“Santa Monica has felt the impact of the global recession like any other city,” says Rob York, a real estate consultant to the Bayside District Corporation, which oversees downtown Santa Monica.

Just how bad is it? Well, it’s not as bad as it could be, says York. “We’re holding our own and we’re doing very favorably compared to many places,” he says. “But that’s not to say we haven’t had our share of pain.”

The numbers do indeed add up to quite a sucker punch. Sales in Santa Monica during the second half of 2010 will likely be down 9 percent from the previous year, according to David Carr, the City's principal investment analyst.

It’s worth noting that the 2008 numbers were down 11 percent, so things have only been getting worse, according to finance officials.

“All you have to do is look at the ‘for lease’ signs,” says Laurel Rosen, president and CEO of the Santa Monica Chamber of Commerce. “And tourism is down” from previous years, she adds.

Although Black Friday wasn’t as bleak as some expected, it likely failed to generate the kind of sales merchants were wishing for.

“On Black Friday, people were out, so that’s a piece of good news,” says Jack Kyser, senior vice president and chief economist at the Los Angeles County Economic Development Corporation. “But not in the numbers retailers were hoping for.

“I think a lot of people were expecting bargains, but retailers have been very cautious about managing their inventories,” he says.

Some economists are hopeful the recession has hit bottom and consumer spending will improve.

“After four quarters of decline, economic growth is resuming,” David Shulman, senior economist for the UCLA Anderson School of Management, states in the school’s annual economic forecast.

The UCLA forecast predicts that the Gross Domestic Product (GDP) will rise by 2.1 percent in the third quarter of 2009 and increase 2.3 percent in the fourth.

Still, some say the slight national improvement will have little, if any, impact on spending during the tail end of 2009.

Christopher Thornberg, a principal with Beacon Economics, which analyzes financial trends, is fairly pessimistic.

“People are still overloaded with debt," Thornberg says. "Other than the stock market, the rest of our financial portfolio is still a bit of a mess.”

With shopping numbers way down, retailers are showing plenty of signs of trouble. Kyser says the apparel business, in particular, will likely take a bigger hit in the coming months.

“A lot of people in that industry feel that after the first of the year, when all of the bookkeeping is done, you’re going to see some more retailers shut down,” Kyser says. “Everything from big chain stores to mom and pops.” He adds that restaurants will likely experience the same crunch.

The local Chamber of Commerce is doing everything it can to help businesses that are feeling the pinch, Rosen says. The Chamber secured $50,000 in state funding to build an entrepreneurial education program that offers free or low-cost classes to business owners. Topics range from how to do business on the web to how to draft press releases and deal with the media.

Rosen says Chamber officials and other community leaders are busy promoting Santa Monica’s “Buy Local” campaign, which encourages consumers to support local businesses. She also advises Chamber members to peruse the “Hot Deals” page on the Chamber’s website, www.smchamber.com, which features discounts at various local businesses.

The Chamber is also a co-sponsor of the “I Am Santa Monica” program, which trains retail and service employees to be better local representatives.

“The goal is to get front-line employees well versed in the community so they’re good brand ambassadors and good salesmen,” explains Rosen. “So that they can impress tourists, talk about the city, have a positive outlook, and speak to some of the tough questions they get.”

Rosen says enhancing employees’ rapport with their customers goes a long way toward furthering Santa Monica’s reputation.

Despite all the chamber’s efforts, it’s still an uphill battle for any business owner.

“In this environment, there are no easy answers,” Rosen says. “You work harder, you market better, you act smarter and you cut costs.”

So when will all that hard work, shrewd planning and aggressive cutting pay off? Will the economy ever begin to show meaningful signs of recovery?

Nationally, growth will be sluggish, according to the UCLA forecast. Shulman’s report predicts that unemployment will be above 10 percent well into 2010.

In California, government fiscal woes and a particularly “ugly” unemployment rate spell trouble for a long time to come, according to another UCLA report by Senior Economist Jerry Nickelsburg.

But on the local front, this year brings at least one sign of hope: the re-opening of Santa Monica Place. The outdoor mall, which was closed in early 2008 to undergo a major renovation, will feature a whole new look, revamped parking and brand new stores. Observers are confident it will boost sales downtown when it reopens August 6.

“It’s obviously going to be a huge draw,” says York. “They’re bringing in Bloomingdale’s and Nordstrom’s – anchor stores that will be powerful draws.”

York says the new Santa Monica Place will recapture many of the shoppers who once frequented the old in-door mall. “The fact that it’s a completely new project will generate interest and bring people back who may have gone elsewhere,” says York.

Carr agrees that the venue will be a boom to downtown Santa Monica. “It should hopefully stimulate the local economy,” he says. “Santa Monica Place was a significant producer of sales taxes" before it closed for renovation.

Adding to the optimism were a few major sporting events in the beginning of 2010 that provided an early boost to the local economy, Kyser says. The Rose Bowl and the BCS national championship were both held in Pasadena in January and brought tens of thousands of tourists to the L.A. area.

While the Rose Bowl stadium isn’t exactly in Santa Monica’s backyard, out-of-state fans were once again eager to visit the Westside, Kyser says.

“For people in the middle of the country, just seeing the ocean is a powerful draw,” explains Kyser, who said that Santa Monica’s retail outlets will likely benefit from the tourism.

Of course, Kyser is the first to acknowledge that it will take more than a new mall and a couple of football games to dig consumers and retailers out of the current economic ditch.

“It’s going to be a very, very slow recovery,” says Kyser. “For a lot of people it’s going to take a long time to get back on their feet.” Fortunately, the Northern

Trust Golf Tournament from February 2 to 7 and the L.A. Marathon on March 21, which will end in Santa Monica, should help boost sales.

Even in hard times, York says Santa Monica will remain a go-to spot for shopping and spending.