enlarge Doug Jones/Staff Photographer

Suzanne Gagnon of the Cooper Jackson Gallery on India Street in Portland says the art market is slow because it’s related to home sales and disposable income. Fewer homes sold means fewer homes that need to be decorated, she says.

enlarge John Ewing/Staff Photographer

Phu Le and his wife, Ann Nguyen, own and run Elizabeth Complete Professional Nail Care & Spa in Portland. Le says business has slowed considerably since last fall, but he and his wife still plan to open a second shop in May.

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FALLING BEHIND: MAINERS COPE WITH THE SLOWDOWN

SUNDAY: Inflation in basic commodities of life -- especially food and fuel -- is squeezing many family budgets dry.

MONDAY: Mainers are falling behind on paying their car loan, utility and credit card bills.

TUESDAY: Foreclosure and mortgage delinquency rates have hit record levels in Maine.

TODAY: Small businesses are finding that Mainers don't think this is the time to be opening their wallets, and that has implications for the broader economy.

THURSDAY: Some individuals and groups are finding a silver lining in the slowdown.

FRIDAY: The next few months -- as Maine enters its crucial summer tourism season -- will reveal just how big an impact the economic climate has on jobs and overall economic activity.

Fourth of six parts

It took 11-hour workdays and devotion to customer service, but Phu Le and his wife, Ann Nguyen, have made the Portland nail salon they opened seven years ago prosper.

Now, despite the loyal customer base that the two refugees from Vietnam have painstakingly built up over the years, business has been declining at Elizabeth Complete Professional Nail Care & Spa.

Earnings at the salon on Cumberland Avenue have fallen 25 percent in the past six months compared with previous years, Le estimates.

"This year, we really slowed down," he said.

With the rising cost of heating fuel, gasoline and food, some of the salon's clients no longer can afford to get the manicures and pedicures they enjoy, Le said.

Given a choice between turning on the heat and getting their nails done, he said, "this becomes a luxury."

The downturn in the economy has made Mainers more cautious about opening their wallets, and that carries implications for the broader economy.

"As consumption goes, so goes the American economy," according to the Economic Policy Institute, a nonprofit, nonpartisan think tank based in Washington, D.C.

Consumer spending has been fueling the nation's economy for decades, but it reached extraordinary levels in the past seven years, the institute says.

From 1947 to 2000, institute figures show, consumer spending averaged 64 percent of the total gross domestic product. Since 2001, it has averaged 70 percent.

That's primarily because, according to the institute, skyrocketing home prices and easy borrowing allowed Americans to use their homes "like an ATM."

They withdrew large amounts of equity from their homes to support their buying habits.

Now, however, home prices are falling nationally. Banks are less willing to make loans, and mortgage equity withdrawals have been "squelched," the institute says.

Consequently, it says, "a drop in consumer spending may not be far behind."

Mainers increasingly are feeling uneasy about spending and the economy, according to a recent survey by Market Decisions, a Portland-based research firm.

The survey, conducted between Jan. 28 and Feb. 25, showed that 56 percent of Mainers believe that now is a bad time to make a major purchase. Last July, that figure was 23 percent.

Nearly seven out of 10 respondents expect bad times ahead financially for Maine businesses.

Fewer than one-seventh of Mainers held such a gloomy outlook in July 2000.

Brian Robertson, director of research for Market Decisions, says the survey indicates that Mainers "are bracing themselves for difficult economic times."

Owners of a wide variety of small businesses say they've been seeing the public unease reflected in their bottom line.

Art sales are down, said Suzanne Gagnon, owner of the Cooper Jackson Gallery on India Street in Portland and president of The Gallery Association of Portland Maine, which represents 16 art galleries.

"As someone said to me, it's been kind of like the perfect storm this winter: the economy, the weather and the election," Gagnon said. "All three things affect art sales."

Her gallery is new -- it opened in June -- and she estimates that sales have been about half of what she anticipated.

The economic downturn means people have less disposable income for purchasing art.

Also, Gagnon said, the art market is closely tied to the housing market -- and as fewer new houses are built, there are fewer people looking for artwork to decorate their new homes.

She and Michael Rancourt, owner of The Jameson Art Group, a gallery on Commercial Street in Portland, say the presidential election this year also is playing a role, because consumers become wary about possible shifts in economic policy.

"During a presidential election cycle, people do sit back a little bit economically," Rancourt said. "I've...