I'm trying to imagine the impact of the housing implosion on my business. So far, there hasn't been much, if any. The customers I have, who work in the trades, seem to be doing O.K. so far. But...you can kind of tell the margin of error has shrunk for them. The guys who were turning down work a year ago, still have work lined up, but aren't being approached anymore. Guys who lost one job, seem to be able to still find another job. But you can feel the extra cushion starting to deflate.

Like I said, so far, I've seen no slowdown of foot traffic. No real scaling back. But I tell -- I can feel -- it coming.

So, as a thought experiment, I've tried to remember what business was like back at the beginning of 2004. I was just going into a new lease, and I was a bit worried about the jump in rent. I decided to stay because I felt I would lose business to a larger extent than I would save in rent if I moved. Within a year, the extra foot traffic paid for the increase, though probably not as much as my landlord might think; since only about 25% of my business comes from non-regulars.

Meanwhile, some of my neighbors looked at the same rent, and jumped ship. (In the interests of accuracy, 3 out of 5 left.)

There were many more long-term businesses here back in 2004. A steady stream has left, to be replaced by 'high-end.'

Before the year 2000, I can't think of many retail businesses in downtown Bend who both positioned themselves as 'high-end' and stocked their stores as 'high-end' who survived for very long. (There are long-term businesses who actually do a fair amount of moderate business who are high end on the surface, but also have local customers...) I believe that the high-end has worked downtown in the last 3 years only because of the bubble. That there has been such an overflow of business, that these types of stores seemed reasonable, almost natural.

I don't believe that under normal business conditions, much less a downturn, such an influx of fancy shops is going to work. I think the whole downtown is going to go into a period of shock. But it will take 3 or 4 or even 5 years before the consequences come home...

So if we bubble busters are right, the downtown is in for hard times.

For some reason that I've never been quite able to figure out, my store tends to perform the opposite of most downtown businesses. When the rest of downtown is riding high, I tend to be struggling. When the rest of downtown is struggling, I'm kicking butt. Perhaps its because I'm a leading (or a lagging?) indicator. Perhaps it's because I'm always planning for slow times, and building or diversifying or paying off debt in the good times. Perhaps my product just does well in slow times. But recessions and slowdowns don't scare me much.

A depression such as we saw in the early 1980's ? -- yes, that would definitely concern me. I'd hate to be paying these rents if the foot traffic dried up.

I'm not a doomster. I think we are indeed going to go back to normal business. I think a lot of home equity money is going to get sucked up in 'high-end' businesses that look great on the outside, but are losing money on the inside. Business owners are optimistic. So if the bleeding is slow, lots of owners will hang on for a long time, hoping things will turn around. So I don't expect anything dramatic to happen.

Just a slow devolution to normal business -- which is tough going, not particularly lucrative, and not something you can waste a lot of money or time on. Owners will have to suck up and work their own businesses, or get out. Because, I think a small business in downtown Bend isn't going to be something that can be done by absentee owners much anymore.

Businesses downtown are going to have to try to downscale a bit. Carry a bit of product that locals might actually want. Get back to reality.