Workers are worried, and they're slowing their spending so fast that a federal tax cut may have little effect on improving the economy.

By nearly all measures, the first four months of 2003 presented a turbulent ride for most companies.

"Not only from a regional perspective, but from a national perspective, we're coming out of one of the worst quarters in the history of our business," said Phil Trenary, president of Pinnacle Airlines, which does business as Northwest Airlink. "In my lifetime, I have not seen it this bad."

Trenary was one of three panelists in a recent economic roundtable moderated by The Commercial Appeal business editor Sonny Albarado and deputy business editor James Overstreet.

Joining Trenary were Calvin Anderson, vice president of Blue Cross Blue Shield of Tennessee, and Nick Clark, partner in the real estate development firm of Clark & Clark.

The discussion - the first of a series of quarterly meetings that the newspaper will have with Mid-South business executives - was held at Lenox Park in the Nonconnah Corridor at the office of Clark & Clark, 6730 Lenox Center Court.

The panel engaged in a vibrant discussion that hit topics ranging from reforming education to expanding the local tax base via economic development to controlling health care costs.

Much of the discussion revolved around the economic anxiety during the first quarter.

"In talking to people, the folks that run the airline (about what worries them), we ask, 'Is it the economy?' 'Is it the war?' 'Is it your personal situation?' You go down the list, and the answer is 'Yes,' " Trenary said.

Anderson said he looks to the next three to six months with "some sense of anxiety."

"We're worried about the number of people who are employed and on their having coverage," he said.

The first quarter of 2003 reflected that worry. The Tennessee Department of Revenue reports that sales tax revenue for Shelby County declined by 4.7 percent in the first quarter, compared with the same period of 2002, after correcting for a change in tax rates.

Of real estate's five sectors - industrial, office, retail, housing and hospitality - only single-family housing has fared well, Clark said.

Anderson said he believes the runup to the war in Iraq prompted consumers and businesses to postpone major spending decisions.

But Anderson looked back on the quarter as "somewhat encouraging."

Enrollment in Blue Cross Blue Shield of Tennessee health plans depends upon employment, and Memphis metro area joblessness has consistently performed better than the national average.

And the latest U.S. Bureau of Labor Statistics report shows that almost 7,000 more Memphis metro area residents had jobs in February than had jobs in February 2002.

"I think we have done quite well locally," Clark said.

Regarding President Bush's proposed tax cuts, Dr. Dale Bails, a Christian Brothers University economics professor, said letting private sector workers and businesses keep more of their income "is always the right decision."

"If the last 15 years have been any indication, the more income that the 'doers' get to keep, the better for all," he said.

But local executives said these tax cuts may have little short-term effect on the one factor - business investment - that has been missing from this recovery.

Managers will wait until the economic cycle clearly strengthens before they start investing, Clark said.

And individual investors are another factor in this equation, Anderson said.

"For businesses to grow, there needs to be investment," he said. "Until we turn the corner on fraud and abuse, you are going to continue to have people reluctant to go into the investment game."

Clark expects the real estate business to remain stable over the next six months, but in the long term, single-family housing unit sales "are going to take a nose dive," because the percentage of the population that owns its own home is at "an all-time high."

Bails agreed. "First, as the stock market recovers, individuals will once again feel more comfortable investing some of their saving in these alternatives," he said. "Second, the housing market has been extremely robust for the last several years so some slowdown is inevitable and does not necessarily indicate any fundamental problem."

The panel showed stoicism about the economic cycle.

"I'm in the airline business; I have to be optimistic," Trenary said. "The airlines have to get their costs in line with demand. The marvelous thing about the country we live in is that we are very innovative."

Trenary said that the U.S. economy has the best opportunity of any economy in the world to bounce back, because of the way the nation responds to issues.

"The airlines will restructure, will get their costs under control, because if they don't, they will go out of business," he said. "In the end, that will be a good thing."

Clark agreed. "The economic pressures we face today in a way are healthy. We created some dysfunction in the 1990s. Long-term, I think this is a healthy process for us."

- Mark Watson: 529-5874