America's Main Street sees wallets opening, a bit

* Talk of depression fades

* Latest indicators breed optimism for small business

* Some areas, like Houston, face more pain

PHOENIX, May 8 (Reuters) - As customers timidly return with slightly open wallets, small businesses across America say their concerns over the slumping economy are easing slightly.

As of yet, there is no rush to hire new staff, and indeed Friday’s U.S. payroll figures showed that employers cut another 539,000 jobs in April. But fears of the recession extending into 2010, or deepening into a depression, are fading on Main Street.

“Three to six months ago, about every third person I’d talk to thought there was this huge, other shoe going to drop, and there would be this massive slide into a depression,” said Bill Austin, an executive at a public relations and marketing firm in Phoenix. “I don’t hear anyone who talks like that anymore.”

Federal Reserve Chairman Ben Bernanke highlighted a recovery in consumer spending and “bottoming” in the housing market this week. Job losses, while huge, are slowing -- and Friday’s payroll cut number is the lowest since October.

A rebound in consumer confidence in April, together with an unexpected drop in new claims for jobless aid this week, also strengthened an argument that the downturn, now in its 17th month, would most likely end by the fourth quarter of 2009.

In one tentative sign of that recovery in Phoenix, Austin said he has begun taking on new clients instead of losing old ones.

Indications that the gloom may be lifting have also been felt in Florida, where tourism makes up the largest slice of the economy.

“We’ve been seeing a little bit looser spending, a little bit better spending,” said Nicki Grossman, president of the Greater Fort Lauderdale Convention & Visitors Bureau, which has noted signs of a recovery in room occupancy rates in recent weeks. “We believe the pent-up demand for travel has begun.”

In Texas, confidence is drawing some consumers back into stores and restaurants and encouraging them to reach to spend.

“(Customers) do feel better about the economy. They can open their wallets,” said Shanka Rika, who runs a family pizza and pasta restaurant in Euless, a town near Dallas.

Rika said turnover had picked up at the restaurant that employs six people, and she may soon even start hiring extra staff. “We are doing better and better,” she said.


Some analysts are not sure recovery will come this year. A healthy pace of job growth probably will not happen until next year, they said, keeping many households underwater and constraining spending.

Certain areas of the country are still mired in gloom. In oil hub Houston, where the local petro economy was sheltered in the early stages of the recession by then-high oil prices, job losses still loom at some of the bigger companies.

But one national survey showed growing optimism about the broader U.S. economy appears to be taking hold among smaller business owners -- a sector that makes up about half of U.S. private sector domestic product.

The study by online payroll service SurePayroll found the proportion of respondents upbeat about the economy rebounded to 66 percent last month, from a low of 40 percent in September.

“The more it trends up, the better we are for our recovery, whether the data is there to support it or not,” SurePayroll president Michael Alter said.

“If business owners are optimistic about the economy, they’re going to make decisions based on a belief set that says things are going to get better. So they might actually buy that delivery truck. They might actually hire that next worker.”

Bob Walk, who runs a print shop in Tucker, Georgia, laid off staff in the downturn, but is now hopeful that a trickle of optimism could lead to more orders.

“We have had a bit of better economic news and a lot of this is psychological. If we get more positive news it may help to loosen up the wallet a little bit,” he said.

Additional reporting by Steve Gorman in Los Angeles, Jim Loney in Miami, Ed Stoddard in Euless, Matthew Bigg in Atlanta, Chris Baltimore in Houston and Andrew Stern in Chicago; Editing by Alan Elsner and Mary Milliken