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Economists looking for signs of stormy seas might want to keep an eye on the boating industry - from canoes to mega yachts, it brings in an estimated $40 billion a year. In the past, it has proven to be a bellwether for the rest of the economy.

NPR's Scott Neuman took the pulse of the nation's sailing capital, Annapolis, Maryland.

SCOTT NEUMAN: Larry Ritchie(ph) is looking over a used 32 foot sloop at one of the dozens of marinas that fringe the Annapolis waterfront.

Mr. LARRY RITCHIE: What I like about this boat is the minimal amount of wood.

NEUMAN: Ritchie already owns a smaller sailboat - bought last year with the stock market windfall, he aptly christened it, Options. But for now, Ritchie is just kicking the keel, so to speak.

Yacht broker Dave Van den Arend has seen a lot of that lately. Many potential buyers are reluctant to sink big money into a boat while the economy is looking so shaky.

Mr. DAVE VAN DEN AREND (Yacht Broker): I think, in general, the people that are looking are being more cautious about it, thinking more about what they're doing. They're a lot more skittish, I guess.

NEUMAN: Skittish might be an understatement for the mood in the recreational boating industry.

Brunswick Corporation makes such well-known powerboat lines as SeaRay and Boston Whaler. CEO Dustan McCoy says his company's segment of the market is experiencing its worst slump in decades.

Mr. DUSTAN McCOY (Chief Executive Officer, Brunswick Corporation): We're one of the first industries to begin to go down as the economy begins to stiffen, if you will.

NEUMAN: Boating was out ahead of the recessions of the early and late '80s. McCoy points out that three-quarters of the nation's 13 million boat owners have incomes less than $100,000. Those middle-class boaters are feeling the brunt of the home mortgage crisis, especially in key coastal states such as Maryland, Florida and California.

Tom Damrich is president of the National Marine Manufacturers Association. He says people often take out home-equity loans to finance their dream boat, but many of them started backing away from the market two years ago.

Mr. TOM DAMRICH (President, National Marine Manufacturers Association): Boating was off about six percent in 2006 - new boat sales. And we're expecting to be off about another 10 or 15 percent in 2007.

NEUMAN: And the mortgage crisis isn't the industry's only concern. It's also exposed to the high cost of oil and raw materials. The current downturn threatens jobs, too. Cheap labor has meant more boats being made in places like Asia. But boat manufacturing is one of the few industries that has largely weathered the outsourcing storm.

Again, Tom Damrich.

Mr. DAMRICH: Boats are manufactured in the United States. The components that go into boats are manufactured in the United States and the boating industry employs a lot of Americans.

NEUMAN: In downtown Annapolis, docks jut right into the heart of the city. Adjacent to the waterfront is Fawcett Boat Supplies, which caters mainly to the area's numerous sailors, a major source of revenue for the town that is also home to the U.S. Naval Academy. Fawcett co-owner, Steve Ripley, says Annapolis is beginning to feel the pinch.

Mr. STEVE RIPLEY (Co-owner, Fawcett Boat Supplies): Everything in our industry is disposable income. It's a luxury, you know? You don't have to go sailing.

NEUMAN: Ripley says people who decide not to buy a new boat typically spend money keeping up their old one - buying a lot of the things that Fawcett sells, such as new winches and fancy GPS units.

Another thing keeping U.S. boat makers afloat in this time of trouble is the overseas market. The weak dollar has attracted an increasing number of Europeans who see boats Made in America as a real bargain.

Scott Neuman, NPR News.

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