BILLINGS - "Could be worse" seems to be the consensus of retailers across Montana as they weather the deepest U.S. recession since the Great Depression.

As the global financial meltdown began hitting last fall, Montana shoppers started paring back spending, especially on luxury items.

"Consumer migration has been toward value. The T.J. Maxxes, the Targets, the Walmarts and Costcos have been pretty strong in this environment," Billings developer Steve Corning said.

In a tough retail market, Corning has managed to sign leases for a Kohl's, a 14-screen theater and 10 other stores at Shiloh Crossing, one of two new retail centers developing in Billings. The second, called Billings Town Square, has Cabela's as its first anchor, and Sam's Club will open early next year. Even in a year of auto industry turmoil, a large Honda dealership is under construction, one of several major construction projects in Billings.

But the history of Montana is repeating itself in 2009: What booms must bust.

Bozeman and the Flathead Valley, which enjoyed years of frenzied high-end homebuilding, are suffering. Three Flathead counties have a total backlog of 472 unsold homes costing $1 million or more, and that correction is affecting retail sales.

"Billings and Missoula are by far the healthiest because we weren't overbuilt and didn't have the big boom, but furniture and luxury goods are suffering," Corning said.

Eastern Montana

Montana's largest retail center is stable enough for a Washington developer to invest about $13 million remaking Billings' oldest mall, West Park Plaza. Workers have punched a road through the middle of the old mall, opening up access and attracting cautious retailers.

"It will take a little longer for us to lease it up. We'll have to be more aggressive, but I feel optimistic," said Bob McDonald.

Area restaurants appear to be staying busy. And the revived "fix-it" attitude has boosted business 30 percent at Willard's Garage.

"Not just anybody can get financing, so now they are repairing their cars," said Willard Myers, who started the garage 25 years ago.

This year, Montanans will spend nearly $7.8 billion on retail purchases, according to Montana State University Billings economist Scott Rickard. Eastern Montanans will spend the most, or nearly $9,000 per person, and southwestern Montanans will spend the least, or $7,549.

After years of deficit spending, Americans have started saving again. If Montanans follow suit and save 4 percent of their incomes, annual retail sales will fall by up to $300 million, according to Rickard.

Montana has no statewide sales tax, so retail sales can only be measured indirectly.

Larry Swanson, director of The O'Connor Center for the Rocky Mountain West in Missoula, uses retail labor income to judge sales.

"After several years of steady growth, from the fourth quarter of '07 to the fourth quarter of '08 there was about a 2.3 percent decline in Montana retail earnings and probably sales," Swanson said. "That isn't terrible, but sales should have been increasing because of the holidays."

Montana's economy will be stable for the winter and should start to recover by next spring, he said.

But consumers tend to rein in their spending when they fear losing their jobs. Montana's August unemployment rate was 6.7 percent, well below the nation's 9.7 percent average, but still double the state's previous lows.

North-central Montana

State government is the economic gorilla in Helena's economy, so the state wage freeze will slice up to $16 million off Capital City payrolls over the next two years, said Cathy Burwell, chief executive of the Helena Area Chamber of Commerce.

Still, she isn't worried and said consumers purchased more than 60 new boats during two Helena boat shows in February.

"We saw more retailers crying the blues when we were paying $4.40 for a gallon of gas than over this recession," Burwell said.

Agriculture, military spending and manufacturing continue to keep the Great Falls economy relatively strong, said City Manager Greg Doyon. Macaroni Grill, Chili's, and On the Border restaurants were added to the city's already full menu of eateries, and traffic control was needed in July when roller skaters started serving food at Sonic America's Drive-In.

Federal stimulus money is helping some builders, Doyon said, but the University of Montana's economic forecast for Cascade County remains conservative.

"They said growth would be very flat for the next two to three years," Doyon said.

South-central Montana

A March gas explosion leveled four historic buildings on Bozeman's main drag, destroying some of some local landmarks like the Rocking R Bar.

Still, aggressive marketing has helped downtown sales, said former mayor Jeff Krauss, who will be mayor again in January. Krauss estimated that some businesses are down 10 percent and some are up 20 percent. Bozeman has caught and released some of the record number of tourists who headed to Yellowstone National Park this year.

"Stores with local flavor, some panache, are doing better because people living here are looking for that little piece of Montana that still exists in Bozeman," he said. "And everyone is hoping for a strong fall."

Uptown Butte's infamous M&M bar and diner, which has been serving food and drink round-the-clock off and on since 1890, is closed and up for sale again.

Last year, Philipsburg businesswoman Margaret Therriault was planning to open a second store in Butte and couldn't back out when the recession hit. The Mining City Hardware and Lumber store opened last March and is progressing slowly thanks to hard work, she said.

"Even with all the stimulus money they got from the taxpayers, the banks aren't lending," she said. "They thought I would fail, but I'm getting there on my own, and I'm doing it without a bank."

Western Montana

Missoula is doing relatively well, according to Tim Winger, who manages Southgate Mall and retail property in the mid-town area.

"Mom is going through a recession, but the kids aren't," Winger said. "Women probably have cut back on spending on themselves, but when you look at the kids buying videos, electronics and shoes, we're definitely having a decent year."

But around Flathead Lake, three counties have seen home sales fall off 25 percent from the peak two years ago, said Realtor Dale Crosby Newman.

Builders once seeking riches erecting multi million-dollar trophy homes are remodeling decks or mowing grass, said Doug Reed, who owns and operates the 75-year-old Whitefish Lake Restaurant/Golf Club.

"We are expecting an 8 percent downturn in sales from Jan. 1 until now, and we consider that a victory," he said.

In 2006, when Sportsman & Ski Haus built a spacious store in Kalispell, sales were great, said chief executive Mike Gwiazdon. Then major timber and manufacturing layoffs boosted Flathead County's August unemployment rate to 8.7 percent. In neighboring Sanders County, more than 12 percent of the workers are unemployed, the highest in the state.

Even in Montana, where hunting, fishing and camping are a psychic necessity, consumers are buying less expensive items, Gwiazdon said.

"But the 8 percent decline is the new 20 percent improvement, so the bad here is really good," he said.