PARIS — There are subtle signs that France is in the midst of an economic downturn, with Parisians choosing to forego a restaurant meal or a movie. But when people here see newspaper headlines proclaiming "la crise," or crisis, they shake their heads in disbelief.

One of those headlines: Reports that a 32-year-old bank employee was stabbed to death while on a cigarette break outside her job by a customer who was angry that he could not withdraw life insurance funds.

More proof that the economic downturn is starting to hit home? The French are doing what they always do when they want government action. On Thursday, workers plan to take to the streets in a general strike.

(Read about one American expat's first French protest.)

“People have become a little …” Vicente Calleja began, struggling, two days after the January stabbing, to find the words to describe that kind of desperation. Failing, the leather shop owner shook his head, pursed his lips and went back to discussing his own woes and strategy for keeping his wits while his 16-year-old business, J.V. Cuir, wobbled.

“One has to fight but there are times when it’s morally, psychologically and physically too hard,” said Calleja, a Spaniard who used to be a professional flamenco dancer and came to France as a teenager. When his career as a performer didn’t take off, he fell back on making items in leather, a trade he learned by watching his father. “One has to be patient and hold on,” he said. “A lot of small businesses are closing everyday.”

According to a poll by the French Institute of Public Opinion, 68 percent of 1,014 respondents to a telephone survey earlier this month said they would be spending less than 150 euros ($198) during the annual sales season, which ends in early February.

“There is a deep, deep crisis,” said Dominique Barbet, an economist at the Eurozone desk of BNP Paribas, the nation’s largest bank. Two of his bosses, the bank’s president and director general, have agreed to skip their 2008 bonuses at the behest of President Nicolas Sarkozy, and the leaders of other large companies have followed suit.

In his New Year’s address to the nation, Sarkozy was unequivocal about the tough year ahead but resolute in his determination that the country should be a leader in confronting the crisis.

The choice, as Sarkozy saw it, was to either give in to or take command of the situation. Not one to be shy about taking the lead, Sarkozy proposed a $33 billion stimulus package. But that shot in the arm wasn’t enough. A new round of measures to encourage banks to lend more money is now in play and struggling industries, such as car manufacturers, have been promised bailouts.

Those large-scale plans were of little consequence to Calleja, who spoke a mix of French and Spanish, and asked “what about us, the small businesses?” His employee, Patrick Henry, meanwhile, predicted an “economic marasmus for two or three years” that will become harder and harder to bear. He cited examples of elderly customers working under the table to make ends meet. In his own case, Henry said, he eats out and goes out less, refuses to spend 10 euros ($13) at the movies. As for “out-of-season fruit, no! Too expensive,” Henry said.  Fifteen years ago, he said, 3,000 euros ($3954) per month was a good salary. Today, he said he would have to earn about 8,000 euros ($10,544) to live an equivalent lifestyle.

Flat consumption for about a year has not helped France's already stagnant economy. Meanwhile, the gap between wages and the price of everyday goods is only getting wider. In addition to the decline in purchasing power, which has been on French minds for some time now, Bardet said that unemployment grew from 47,000 new additions last October to 64,000 in November, the largest increase in over a decade, exacerbating the country’s chronic joblessness problem.

“People are really afraid of the outlook, especially for unemployment,” Bardet said. And the forecast is not rosy; he predicted a more than 2 percent decline in the gross domestic product.

All things considered, the country’s vast social system and people’s financially conservative conditioning may be helping to stave off some of the effects of the economic downturn — for now. Being laid off doesn't mean an end to health care in France and unemployment benefits can be generous, sometimes lasting as long as two years. “Yes, it could be even worse without this huge social net,” Bardet said.

Harriet Welty, an American author who has lived in Paris for more than 35 years and who has written and lectured extensively about French customs, echoed those sentiments, saying, “I don’t think the French realize how many perks they have.”

Another factor working in their favor, she said, is that, contrary to the United States, “France is not a credit card society; the French have debit cards.” Still, people do have much less discretionary income and feel as though they are paying too much for things, including more for groceries and clothes, she said.

“The collective mood has been down but the French are making more babies,” Welty said. “Go figure that one.”

Henry, the leather shop employee, proposed another solution. “If tomorrow, we could raise our salaries the way Sarkozy has raised his then everything would be fine,” he said. But he’s not holding his breath that this change will come anytime soon.

“In France, we cannot evolve,” he said. “Even with another revolution, things will not change.”

(Also - Obama's election prompts French to ask "Why not here?")

(Germans respond to economic downturn)

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