Speakers were not afraid to use the “R” word at Friday’s Napa County Economic Outlook conference.

Whether officially announced or not, a recession is here, said Brian Pretti of Mechanics Bank. Napa Valley, he emphasized, will not be immune.

Facing such economic challenges, it’s critical that the wine industry doesn’t risk complacency, said Alex Ryan of Duckhorn Wine Company.

The annual conference, produced by the Napa Chamber of Commerce, was timely this year as U.S. stock market turmoil continues making headlines across the country.

The several hundred attendees began their day as Pretti, a free-market economist with Mechanics Bank, dissected the economic troubles.

While consumers continue to struggle with house payments and credit card debt, the unemployment rate has risen and real wages aren’t keeping up with rate of inflation, he said.

Unlike previous generations, “People are more comfortable taking on credit,” said Pretti. Many have taken on too much. Consumers will be forced to cut back spending and borrowing.

They aren’t the only ones to blame.

“Companies have borrowed too much and invested the money in questionable assets like sub-prime mortgages,” said Pretti. Many are forced to sell to pay back their own investors.

While the $700 billion bank bailout Congress approved last week will take bad assets off the books, it could also cause higher inflation and higher interest rates, Pretti said, adding the government must borrow money to finance these bailouts. “Who is going to lend them the money and at what cost?”

Over the last decade the largest U.S. financiers have been foreign countries, such as Russia, China, Brazil, and OPEC members.

“Will they continue to invest in the United States?” Pretti asked.

Game changers

Pretti said now is the time to consider basic investments such as energy, agriculture and water, because consumers need them no matter what.

“Too many people have been in denial about this. It’s here right before our eyes,” Pretti said. “The events of the last three months are game changers.”

His advice?

“Calm down,” said Pretti. “Don’t get whipped into a frenzy.”

Homebuyers can capitalize on record lows, he said. “This is when you get some of your best investment opportunities. ... We need to acknowledge the reality of the economy we live in so we can make intelligent decisions.”

Jeff Gerlomes, Napa Chamber of Commerce chairman of the board, said, “We do need a wake up call. There are tough choices we have to make.”

Becky Garza, Manager of St. Helena branch of Umpqua Bank, said she attended the conference as she looks for ways to help customers beat the odds.

“I came to be smarter for my customers and my family,” Garza said. “I want every bit of information I can get about how to help my customers when they come into the bank,” she said.

“A lot of very financially savvy customers are coming into the bank and looking for fundamental ways to secure their money, earn a little interest and keep their money safe and sound.”

Some clients have taken money out of more volatile investments for more secure certificates of deposit. While investors aren’t looking for the gains of the past, “they don’t want lose their principal.”

Garza said she was particularly interested how the national and global economy impacts Napa Valley.

“Are we recession-proof because of the wine industry?” she asked. “If we aren’t — what are the threats specific to the Napa Valley?”

The conference also featured a panel of wine experts including Michael Fisher and Scott Becker of Global Wine Partners, Beth Novak Milliken of Spottswoode Vineyard & Winery and Duckhorn executive Ryan.

Even as Napa Valley remains a leader in the wine industry, “We must stay competitive,” said Ryan. “Quality alone will not set us apart any more.”

The panel agreed that the fundamentals of the luxury wine business are strong, but over the next 24 months, the industry faces challenges. Some long-time winery owners are nearing retirement. Other have sold to larger corporations.

Napa Valley can’t ignore other wine regions.

“There are fierce competitors that have Napa Valley in their sights,” Ryan said. “They want our tourist and brand equity dollars.”

The industry needs to work together, from regulation to green practices to community efforts, he said.

“We need to work hand-in-hand with all partners to deliver a complete customer experience,” Ryan said. “Now is the time to reflect on how we got here and how we’ll stay competitive for the next 30 years.”