THOSE WHO PAID ATTENTION to the news a few months ago probably heard how Macy’s, Target and most of the other major retailers didn’t have a very merry Christmas. Bloomberg reported in January that both companies had a dismal end of the year, their slowest holiday season in five years. A retail slump, combined with rampant mortgage foreclosures, has every notable U.S. economist speculating that a recession is on the horizon, if it isn’t slamming some areas already. Churches are slow to group themselves with the for-profit, sales giants, but one similarity is certain: Those hesitant-to-buy shoppers are the same people who occupy the pews on Sunday. Though churches are not impervious to economic downturns, experts say they can weather recessionary storms and have no reason to fear them.

In the past, recessions have not necessarily correlated with a decrease in giving, says John O’Hara, research analyst for the Lutheran Church-Missouri Synod in St. Louis. In fact, he believes that sometimes people give more to churches during recessions: “If people are hurting and they’re not buying everything under the sun, they might have more discretionary income to contribute.” After all, the decision of whether or not to give to a missions fund is different than whether or not to buy Aunt Barb a digital camera.

Don House, economic consultant for RRC Inc. in Bryan, Texas, has served on the United Methodist Funding Patterns Task Force. He points out that per-capita income decreases during a recession, and a close relationship – at least in the United Methodist Church – exists between income and giving. “Between 1974 and 1995, giving per member followed the path of the business cycle,” he claims.

On the other hand, no sizeable drop-off in giving was found during the first years of recessions, according to Empty Tomb Inc., which performs church business research.

“Recessions are not all experienced equally,” House says. “Some parts of the United States can experience a deep recession while other parts avoid it altogether. Even if the experts project a recession, communities may or may not experience it.”

A mere slowdown, similar to the eight-month decline in 2000 and 2001, has little effect on church giving, O’Hara says. But “severity matters,” and multiple-year crunches – most notably the Great Depression of the 1930s – resulted in an inevitable drop in offerings.

The causal recipient of decreased giving would be decreased church spending. Intuitively, a bad economy might keep a church from building a new activities center or sending the youth on a missions trip to Belize.

“Church spending is definitely driven by local costs,” O’Hara asserts, listing health care costs and high energy prices as possible hurdles to church ministry expansion. “[Churches] may want to update facilities, but they don’t this year because they have to heat the church.”

House adds, “A recession that hits a community will affect member giving, but with some delay. Local churches commonly budget on an annual basis, so most will have the time to adjust next year’s spending in anticipation of a decline in gifts. Even if the recession hits in 2008, most churches will experience the decline in giving in 2009.” He notes that churches often don’t give up on their capital campaigns in recession years, but they do cut back on project sizes.

O’Hara suggests that churches can benefit by borrowing from church-geared lenders, both within and outside their denominations. Often, these firms will offer interest rates significantly lower than a normal bank. J. Lyndon Johnson, president of Johnson Mortgage Services Inc. in Cincinnati, believes that the slowing economy has deterred some churches from borrowing, which ironically has lowered his company’s interest rates to as low as 4.39 percent.

“If interest rates are relatively low, churches will take on greater debt loads in order to complete the planned project – even in the face of less successful pledge campaigns,” House says. “If we have a mild economic recession with relatively low interest rates, we may not find any evidence of a recession among building programs.”

Perhaps the real economic villain for churches is inflation, not a recession, O’Hara speculates. “People race out to buy things before the price goes up, and it’s a self-fulfilling prophecy because prices then go up,” he comments. And if the price of goods rapidly increases, churches and their members are left to make up the difference in the short run. Throughout church history, giving has kept up with inflation, O’Hara affirms. But, he points out, today’s generation gives a smaller percentage of its income than previous ones.