For some Tristaters, concerns about the weakening economy have no more complex explanation than this: It was January.

        David Daniel, for example, spent more over the holidays than in 1999, so the 25-year-old from Bellevue now is “less able to be frivolous” than before. Translation: Mr. Daniel, an assistant produce manager at Bigg's, is eating out less.

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        Barbara Scull, co-owner of Clothes 2 Die 4 Inc., a contemporary boutique on Hyde Park Square, said her business has fallen off, but she blamed it on a combination of weather and a traditionally slow shopping month. “In a nutshell, we continue to feel optimistic about our business,” she said.

        The situation nationally is a little more complicated. But as more data pours in, the more it appears that the economic weakness is being concentrated in manufacturing and in the Midwest.

        The bad news continued this week:

        • Friday, the nation's unemployment rate climbed to 4.2 percent in January — still considered full employment, but also the highest level in 16 months — as the dramatic slowdown in economic growth forced thousands of layoffs. Manufacturing was the hardest-hit sector, losing 65,000 jobs last month and bringing total factory losses to a quarter-million since June.

        • The Labor Department said Thursday that the nation saw 2,677 mass layoff actions by employers in December, putting 326,743 out of work, both well above last year's levels. The Midwest absorbed almost half of those layoffs, with the hardest-hit industries being business services, transportation equipment and construction.

        • An index of manufacturing released Thursday hit a level that usually indicates recession. The National As sociation of Purchasing Management said its index hit 41.2 in December — the lowest reading since 1991 and below the 42.7 mark that usually indicates a recession.

        But not all the news this week has been bad.

        In December, consumers' incomes rose 0.4 percent and spending rose 0.3 percent, the Commerce Department said Thursday.

        While it's clear that consumers have cut back on big-ticket spending, they haven't completely withdrawn.

        “December was a bad month, but the January reports suggest that despite the loss of confidence, consumers are still spending,” said David Wyss, chief economist at Standard & Poor's in New York. “The anecdotal reports we're getting in — for instance, from travel agencies — say consumers are still spending. ... As long as sales are increasing, there's every prospect (the economy) will pick up steam again in the second quarter.”

        That's evident in Greater Cincinnati — at travel agencies, for example.

        “Customers are continuing to plan and take vacations,” said Chip Burgess, of Carlson Wagonlit Travel in Covedale.

        Becky Greiner of Magellan Travel Inc. in Blue Ash agreed: “We're not seeing any problems at all.”

        Still, some shoppers at Florence Mall on Thursday said the cooling economy had made them more cautious.

        “Interest rates really have changed how I use my credit card,” said Cathy Donoho, a 32-year-old social worker from Florence.

        She said she went to Jamaica last year, but she doesn't plan any major travel for 2001. And Ms. Donoho, who also is a student at Northern Kentucky University, is watching interest rates, since she's thinking of buying a car.

        So is Archie Hayden, 27, a machine operator from Blue Ash. But that car hunt is “kind of at a standstill” until he sees what President Bush will do about the economy, Mr. Hayden said.

        Business at the mall itself has been good, said Elena Miller, marketing director. Sales grew 7 percent in 2000, and though January figures were not in yet, she said, “Traffic has been very, very good.”

        Economists played down the purchasing managers' report Thursday — it was bad news, but it's not news that manufacturing is in a funk. The stock market also showed no reaction to it, as the Dow and Nasdaq indexes drifted.

        “The markets said, "Manufacturing is in a recession, so what else is new?'” said Song Won Sohn, chief economist at Wells Fargo & Co. in Minneapolis.

        Manufacturing represents about 15 percent of employment nationally and 41 percent of gross domestic product. Contrary to myths about the decline of manufacturing in the United States, its share of gross domestic product has been rising, pulled upward by growth in information technology — computers and peripherals, telecommunications equipment and software.

        Mr. Sohn said manufacturing is suffering in part from its own excess. “Businesses and consumers were too optimistic,” he said.

        The drop in the purchasing managers' index points up the current “two-speed economy,” said Anirvan Banerji, director of the Economic Cycle Research Institute in New York. Manufacturing is down, but the services sector — making up about 55 percent of gross domestic product — is still growing, albeit more slowly, he said.

        If services tank, then the United States will have a recession, and that hinges on consumer confidence. “If confidence starts to unravel, it could go very fast,” Mr. Banerji said. “We need to see a stabilization of confidence.”

        The January drop in consumer confidence reported by the Conference Board on Wednesday “was bad news,” Mr. Banerji said. But that survey was done in early January, and he said the institute's weekly index of leading indicators show there are already signs of a turnaround.

        “The media tends to take these crises and do a Chicken Little,” said Barbara Reid, a retiree who lives in Milford Township, Butler County. “I think I've been more nervous with the rising stock market. The further up it went, the more possibility there was for a correction.”

        Enquirer staff writers John Eckberg and Patrick Stack, the Associated Press and Bloomberg News contributed to this report, as did Enquirer contributor Jenny Callison.

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