Despite the grim economic news making national headlines almost daily, Rapid City Mayor Alan Hanks says the local economy is weathering the storm well.

Knock on wood.

"Up to this point, the city is in very good shape. Now I will tell you we're keeping a close eye on that. Will the national economy affect our local economy? Eventually it will, but so far it hasn't," he said.

Hanks said the downturn in the stock market has had no effect on the city's assets, which are kept in government-backed securities and bonds.

Likewise, though the national unemployment level is at 6.7 percent according to the Bureau of Labor Statistics, Rapid City's unemployment rate is 2.5 percent, which Hanks said is the third-lowest unemployment rate in the nation among cities of 50,000 people or more.

Hanks said the city uses four benchmarks to measure the health of the local economy: sales tax, the BBB (bed, booze and board) tax, the BID tax and building permits.

City sales tax revenue was showing a 7.9 increase at the end of October compared with the same period a year ago. The city used a 3.5 percent increase prediction when it prepared the 2008 budget which means revenue, so far, is ahead of projections, Hanks said.

Local retailers are generally positive about the future, though some have experienced a slowdown this year.

Chris Johnson, of the Clock Shop, 625 St. Joseph St., said business was down considerably in November and December, but planning ahead and reducing inventory early in the fall has helped.

"As a small business person, you have a responsibility to keep your eye on the horizon. With a small business, it's a little easier to tweak your orders quickly," he said. "These last few days, I can tell you things have been up quite a bit, so I'm happy to see that, because every day counts in the Christmas season."

Johnson said generally speaking, businesses in Rapid City fare better than in other parts of the country. In talking to other local business owners and associates around the country, Johnson thinks the situation is better here than elsewhere.

"Of course, when you're feeling a pinch, it's a pinch no matter what," Johnson. "I'm glad to be located where we are. I think this is a real close-knit community, and we kind of take care of each other. I have a lot of customers who come in and express a desire to support local businesses, and I appreciate that."

Sonja Crowley, owner of the Micki Paris store at 505 Seventh St., agreed that loyal customers make a big difference in keeping businesses alive.

"Customers have not quit coming. We have a clientele that we've built up, and they support your local downtown business," she said.

Crowley said there was only about a $500 difference in sales the last three months compared with the same period a year ago. She said the only bad month she had was during the Black Hills Stock Show, but otherwise her business has been steady.

Crowley said she tries not to listen to the gloom-and-doom forecasts on the nightly news. Instead, she focuses on making her business successful.

"Overall, I'd say we aren't less than 5 percent off for the year. And if you took the Stock Show off, we'd be ahead of last year," she said.

At Target, store team leader Matt Stewart said with the move to a new store at Rushmore Crossing, it's a little difficult to compare this year to other years. However, business has been brisk in the days leading up to Christmas.

"We're just rocking right now. We're having a really good Christmas season," he said. "Right now, with it getting down to the last minute, we've got people coming in for stocking stuffers or that last minute gift."

Hanks said the city's other benchmarks indicate the local economy is doing well. The city's two tourism and visitation related taxes, the BBB and BID, are doing well, which says to Hanks people are still coming to Rapid City to eat in its restaurants and stay overnight.

The Bed, Board and Booze tax, which adds 1 percent on sales of prepared food, alcohol and lodging, is up about 6.12 percent from last year. The BID tax is up about 2.61 percent, generated from a $2 per night, per room fee added to hotel room bills for marketing by the Convention and Visitors Bureau.

Meanwhile, building permits are down about 21.67 percent. However, the number is deceiving because 2007 was huge, reaching a value of over $180 million. This year was still the third-highest year for building in Rapid City history, behind 2006 and 2007.

"In 2007, we had an absolutely incredible year. We had Rushmore Crossing, we had Cabela's. We had a lot of big projects come in. Building is still going strong in Rapid City," Hanks said.

Curt Wieman, president of the Black Hills Home Builders Association, said 2008 has been an average year for local builders, and while it's not booming, the local industry is not experiencing the kind of downturn reported nationally.

"Compared to the rest of the country, we're not doing bad at all," he said. "We have seen a little bit of a slow down, but you have to remember we're in the wintertime, and it always slows down now."

Wieman said despite national media coverage, it's actually a pretty good time to buy a house, given extremely low interest rates being offered and considering home values are likely to climb quickly when the rest of the country climbs out of its slump.

The previous two years were banner years for local builders, Wieman said. Houses couldn't be built fast enough. This year is more of a normal, average year, he said.

"When you're in the building business, you're always optimistic, but you still have to lend an ear to what's going on around you. We're gonna be OK. We're about average," he said.

Contact Scott Aust at 394-8415, or scott.aust@rapidcityjournal.com