Sovereign Bank and the Greater Providence Chamber of Commerce hosted yesterday’s discussion of the Providence area’s economic forecast. The bank’s annual Economic Outlook survey had found pervasive pessimism about the future of the state’s ailing economy.

The Providence Journal Steve Szydlowski

PROVIDENCE –– The banner at the door, perched on an easel, was a ray of sunshine. For Sovereign Bank, it beamed, the “future is bright.”

But inside the ballroom at The Westin Providence hotel, the projections were a good deal gloomier. The bank’s annual Economic Outlook survey had found pervasive pessimism about the future of the state’s ailing economy. Despite prodding from the moderator, panelists analyzing the report yesterday morning offered little encouragement.

“We have not found the bottom,” Charles T. Francis, president of the Rhode Island office of CB Richard Ellis, the giant commercial real estate brokerage, said. “It’s going to be tough sledding for awhile.”

Eighty percent of businesses in the Providence region have no plans to hire new employees this year, according to the survey of 700 consumers and companies.

More than half of businesses forecast no change in staffing levels, 20 percent predict a “slight decrease” and 5 percent expect a “significant decrease.” Last February, only 15 percent of businesses surveyed planned to reduce staff.

Those findings cast doubt on the possibility of a quick recovery for Rhode Island, where unemployment hit 10 percent in December for the first time in three decades. In the poll, the lack of employment opportunities was ranked by consumers as the state’s top challenge.

Rhode Island’s unemployment rate is the second-highest in the nation and the worst in New England, with 56,800 residents looking for jobs. Sovereign, the report’s author, announced plans to lay off 1,000 employees in December.

The New England Public Policy Center has said Rhode Island’s jobless rate may not improve until 2011. Yesterday, Jennifer Weiner, a NEPP policy analyst, said she was not surprised by the survey’s findings. “That’s definitely consistent with troubling trends that we have seen,” she said.

Jobless residents spend less, denying revenue to businesses already suffering from a plague of parsimony.

Bank loans, the other key source of cash for businesses, are also increasingly elusive. A new report from the Federal Reserve found that two-thirds of loan officers nationwide said they tightened conditions for business loans over the past three months.

Even employed consumers, stunned by evaporating housing value, shriveling 401(k) accounts and stock portfolios and the threat of layoffs, are stitching their wallets shut.

“People are starting to stockpile,” Stephen Andrews, senior vice president of the Capital Markets Group at Sovereign Bank, said. “It’s slowing down the recovery.”

The decrease in consumer spending has been obvious across the country, particularly during the critical holiday shopping season. The new survey shows that Rhode Islanders, too, have sharply cut back spending.

In the Sovereign poll, 53 percent of respondents said they are eating out less frequently, 48 percent are buying cheaper grocery items and 43 percent have delayed a “major purchase.”

For businesses, the biggest challenge this year will be “attracting new customers,” the survey found.

Nationally, an increase in household savings has been attributed to a lack of confidence in the economy. But in Rhode Island, at least, it also appears to be a response to household bank statements.

The survey found that 57 percent of consumers are worse off financially than the previous year and 36 percent fear their finances will worsen further this year.

The most daunting personal financial challenge, the survey found, is maintaining a standard of living.

“This morning, everyone is asking one question: Is there any good news?” said Laurie White, the panel’s moderator and president of the Greater Providence Chamber of Commerce. “You cannot sugarcoat it. These are extraordinarily difficult days.”

Fresh off Sovereign’s sale to Madrid-based Banco Santander, the bank’s officials say it is strong. Yesterday, two ratings agencies –– Standard & Poor’s and Fitch –– upgraded the debt ratings for Sovereign. And the bank announced plans for a major ad campaign announcing its acquisition.

“It’s not all doom and gloom,” Steven J. Issa, Sovereign’s market chief executive officer for Southern New England, said in releasing the Economic Outlook report.

Loans for businesses and consumers have begun to rise, Andrews said. Consumer spending, meanwhile, will not be contained for long, he added. “Americans’ propensity to spend is incredible,” he said. “They’re taking a breather right now and building up ammunition.”

But few analysts predict spending to reach pre-recession levels anytime soon.

The economic stimulus package will quickly boost construction jobs, a sector that has been hard hit in Rhode Island, Hank L. Gutman, a principal at KPMG, said during yesterday’s discussion. But before the broader economy recovers, he said, a second package will probably be necessary.

In an interview, Governor Carcieri questioned the federal spending plan, saying it offers too few tax cuts to encourage consumers to spend and businesses to grow. “People are just sort of marking time,” he said.

So far at least, the federal bailout of banks has not worked as designed, failing to pry open the spigot for major loans, Francis, of CB Richard Ellis, said.

“We will get through this,” Francis said. “I just hope I’m around to enjoy it.”

bgedan@projo.com