By several measures, Montana's economy is faring better than that of the rest of the country.

Unemployment here has risen only slightly this year, payroll employment growth over the past 12 months has been stronger than all but four other states, and the world is still demanding products from some of Montana's key industries, including agriculture and natural resources.

But none of that matters much to the regular customers at the Earlybird Cafe on Custer Avenue. With the stock market having shed trillions of dollars of value in the past two weeks and worries about a global recession or even meltdown of the entire financial system seeming to get closer to reality each day, Helenans are growing ever more somber about their prospects.

"The chatter over coffee is how high the prices are of everything and how tough it is to make ends meet," said owner Terry Westlund. She's got some 40 customers who frequent the cafe several times a week, and she's noticed a decided downturn in the morning mood over the past several weeks.

"Everybody definitely has some worries," Westlund said. "They don't know if they're looking at a depression, or a major recession; they're starting to cut back in little ways."

It's a different chorus of the same song for regular customers at Montana Outdoor Sports, where owner Rex Seeley said "there's a terrific amount of uncertainty" among Helenans about the future of the economy, and that several hunters have said they'll try extra hard to bag an elk this fall to ensure there's meat in the freezer.

"As soon as somebody says one thing, then everybody opens up," Seeley said. "They're unhappy about the larger corporations, unhappy about the bailout, unhappy about the politicians that were supposed to be doing something about it so we didn't get to this point."

To be fair, it's not all bad news -- Seeley said many hunters are encouraged by the recent plunge in gasoline prices, which fell below $3.30 locally this week, down nearly a dollar a gallon from this summer's highs.

AAA MountainWest believes gas prices have farther to fall. The retail average in Oklahoma this week was $2.91, the first state average to fall below $3 since February.

Seeing major banks fail or get scooped up by competitors in hastily arranged takeovers hasn't helped the psyche of the American consumer, even though government and private banking officials insist Montana banks and other financial institutions are secure.

At Helena Community Credit Union, president and CEO Greg Strizich said he's had lots of conversations lately with customers about deposit insurance in efforts to assure them their money is guaranteed by the federal government and is safe.

"I think that helps allay some concerns, but at the same time, because of the stock market and the national economy, people's 401Ks (retirement accounts) are getting hurt badly," Strizich said. "And it's unnerving. It's hard not to have anxiety when these investment banks that have been around for 100 years start folding like tents."

Despite the rash of negative headlines, Strizich said business is good. The credit union's deposits are up, he said, perhaps because Helenans are reluctant to invest their money in stocks and would rather stay in cash.

But cash in the bank isn't even enough for some people -- Strizich said he's talked to one customer who's considering closing her deposit account and putting currency in a safety deposit box. For some, even the "full faith and credit of the United States government" insuring their deposits is no longer enough.

Mark Dixon, a financial adviser with Edward Jones, said stocks are a tough sell, even though lots of blue chips are selling at remarkable discounts to their historical norms.

"A lot of people are concerned and they're sitting tight," he said. "And some people that were thinking of doing things like remodeling their home or buying a car are sitting on the sidelines."

Markets are cyclical, and Dixon said stodgy investments like annuities are providing much-needed relief for some Helenans.

"People with pensions or fixed-income annuities are pretty happy to have those right now," he said. "That 6 percent return didn't seem so great a few years ago, but now people are realizing it's important to have some fixed income."

Clinical psychologist Richard Emery said downward spirals like the one taking place in global financial markets are fueled by panic that spreads from one investor to the next and from one country to the next.

"There's so much psychological panic out there right now," he said. "People make decisions based on emotions rather than making rational decisions, and it's very contagious."

Emery said that over the past few weeks, several clients have mentioned increased financial stress and concern about their jobs. His advice sounds similar to what you might hear from your broker.

"I listen to them, try to be understanding and say some of the same things that the economists are saying," he said. "We could be in for a rough ride for a number of months, but the overwhelming odds are that the economy is going to bounce back. We just don't know when that's going to be."

Reporter John Harrington: 447-4080 or john.harrington@helenair.com