Ho Ho Humbug

By NANCY GIBBS

Merry Christmas!

That was about the cheeriest sentiment Americans could manage last week, as the country caroled, gift-wrapped and tinseled its way through the holidays in search of some deeper tidings of comfort and joy. For those with a global perspective, there is plenty to inspire gratitude this season: the country is not (yet) at war; there are families in Romania, Germany, Hungary and Czechoslovakia sharing the holidays in freedom and safety for the first time; Frank Sinatra just celebrated his 75th birthday. But try as they will to count blessings, many Americans who read the newspapers, check their bank statements or listen to the tinny jingles from Washington have a hard time believing that 'tis the season to be jolly.

If people's behavior is unnaturally -- even unnecessarily -- gloomy, it is easy to understand why. They feel less rich, less safe and less certain about what the future holds than they did in Christmases Past. In the real estate fantasylands of California and the Northeast, homeowners who think they live in a $300,000 house suddenly "lose" $80,000 when they try to sell. In Chicago out-of-work architects are invited to lunch at a soup kitchen for a bowl of chili and some free advice from colleagues who have survived previous recessions. Washington hairdressers report that business is down: in hard times, people let it grow. And as long as the nation is stuttering toward war, there is no predicting when the job market will open up again, or prices stabilize, or tension ease.

The irony of any recession is that fearing it makes it worse. Consumer spending accounts for two-thirds of America's economy, which means that when buyers are spooked, the rest of the economy shudders. In the last shopping days before Christmas, stores across the country were already thick with post- holiday sales. Some items were moving nicely: oversize freezers to keep groceries bought in bulk; wood stoves to cut down on utility bills; shoe trees, mason jars, sewing kits, to extend the life of life's necessities; and any $5 present that looked as if it cost $25. At the IKEA store in Elizabeth, N.J., shoppers could lease a Christmas tree for $20 and get $10 back if they returned it for recycling into mulch.

Beneath the retrenchment and return to basics one can see the mark of American Calvinism, as consumers pull back and repent what many now consider the evil excesses of the Reagan years. The doomsayers seem to be savoring the chance to put priorities straight. "When the stock market crashed in '87, people thought the party was over -- the bar was still open but the band went home," says a young financier who has been laid off by the junk-bond department of a New York City investment bank. "Well, now the bar has closed."

Those looking to Washington for guidance may be disappointed. As the sordid spectacle of the budget battle and the midterm elections showed, there is still no will in the capital to make hard economic decisions. "How do they ever expect our kids to pay that $3.3 trillion debt?" worries Tom Tenner, a retired appliance-company executive in Houston. "No one seems to care or give a damn. They feel we can borrow forever." Still, the capital is not immune to the jitters. Washington caterers say that guest lists are smaller and there are more lunches than dinners, more wine than champagne. "It's chic to be prudent," says Michelle McQuaid of Ridgewell's Caterers. "Being rich in the '90s is not in style." Families are learning hard lessons in economics, and in discipline. One by one, items drop from the budget of a middle-class dream: cable TV, designer coffee, a winter vacation, credit cards. In the boom years of the decade, when no excess was too wretched, household debt grew about 50% faster than disposable income. "I really try to get us on a savings plan," says Sarah Frazier, who lives with her husband Richard in Idyllwild, Calif. "We want to start a family someday, and it's getting harder and harder with food prices, car loans, interest payments and utilities. Just when you think you have a grasp on things, something changes."

For those who have actually lost their jobs -- an estimated 267,000 in November -- the holidays are especially painful. This recession began in the service sector, rather than in manufacturing, and so has taken a swipe at the security of white-collar and blue-collar workers alike. "It's a terrible time of year to be sending cards to friends across the country," says Robert Bach, who moved to California from Omaha only 18 months ago and has already lost two jobs because of the slumping economy. He does feasibility studies for new buildings -- of which there are not too many these days. "The last thing you want to say is, 'I've been laid off.' That really dampens the Christmas spirit."

Michael Kantor, 44, lost his job last summer as vice president of the United Cotton Goods Co. of Griffin, Ga., a textile company that Kantor says was "beaten to death by imports." He has flooded the mails with resumes, in the hope that "if you shoot enough bullets into the woods, a deer will run into one." He answered an ad in the Wall Street Journal for a corporate financial officer last September and waited months for a response. "As people are scared, they are taking longer to make decisions," he said. That is true, a company official agreed, but the delay also had to do with the fact that the one-day, one-time ad generated 2,500 responses.

Those laid off from manufacturing jobs face even harder struggles in an age of weak unions, flimsy safety nets and cutthroat competition from overseas. "The people who used to scrimp by are just not making it today," laments Jodie Goodwin, who heads a group of Houston social-action church coalitions. "Families that never were at risk before are having to make basic, tough - decisions about which bill to pay: utilities, groceries or rent."

From across the country come poignant stories of lifelong workers facing a hollow old age. Charles Thibodeau, 58, was laid off from the James River paper mill in Fitchburg, Mass., last spring -- just 3 1/2 years short of retirement. Although his children are grown, living on unemployment has required some belt tightening. "Not much you can do," he sighs. "Pay the bills. Taxes are going up, and we don't have much money coming in." It makes for a simpler life. "Once in a while we used to like to go out to a lounge and have a few dances, a couple of drinks. Once in a while probably take in a show. Now we go to McDonald's."

Workers whose jobs are cyclical, seasonal or subject to the whims of the market feel vulnerable even without receiving a pink slip. Some benefits, like health insurance, may be tied to the number of hours logged, and so, in a slowdown, workers suddenly find themselves without coverage. Mayo Gonzales, a 57-year-old carpenter in Ontario, Calif., did not amass the 250 hours he needed this year to keep his benefits. "At my age -- at any age -- it's very important to have insurance because anything can happen," he says. "This is one of the worst slowdowns I have seen. We had one in the early '60s and another in 1982, but not like this."

People whose jobs are still secure feel the pressure in other ways -- particularly if they are trying to buy or sell a home. California real estate agents have taken to burying statues of St. Joseph, the patron saint of family and home, in the yards of clients in hopes of changing their luck with prospective buyers. "One of my agents heard about it, and his client wanted to try it," says real estate broker Charles Lamb. "She got three offers in 10 days."

Even if they are not planning to sell, homeowners feel poorer when values drop. "The price of your house was your standard of value in the 1970s," says Kathryn Eickhoff, president of her own economics-research firm in New York. "You couldn't make money in the stock market, but you knew your house would go up in value. But now that confidence is being tested, and people feel vulnerable."

A New Jersey residential builder, Calton Inc., has an antidote: through its "Peace of Mind Guarantee Program" it promises skittish home buyers that if they lose their jobs due to economic conditions within a year of closing, Calton will cover mortgage payments up to $1,500 a month for six months or until the owner returns to work. Says newlywed Wendy Goldberg, a computer instructor who will soon close on a $150,000 home: "The idea of taking all our funds and running them dry to buy a house was very scary. At least this way we'll have a place to live if something happens to our jobs."

For those with a merry nature, it may be possible to find some hidden value in the sober spirit of this Christmas season. There is a pleasure in searching for just the right gift, rather than throwing money at fads; in making presents rather than buying them; in savoring the lessons of the season, about generosity and devotion and mercy. Whatever the state of the economy, it would have been hard to waltz blithely through the holidays while the families of 280,000 troops kept vigil. As it is, the burdens, and hopes, of the season will be widely shared.

And Happy New Year.

With reporting by Ann Blackman/Washington, Jeanne McDowell/Los Angeles and Richard Woodbury/Houston