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Cover Story Economic Outlook

Question Marks Dominate the Horizon

Entering a new year, there are always question marks about the economy and speculation about the factors that will determine just what kind of year it will be. For 2021, there are far more questions — and fewer definitive answers — and the speculation comes in layers. A great many of them. Much of this speculation involves the pandemic and, with vaccines becoming available to ever-greater numbers of people, whether we are truly seeing light at the end of the tunnel, the beginning of the end (of the pandemic), or any of those other phrases now being used so frequently. But there are other things to speculate about as well, including what the landscape will look like when and if things to return to normal, or a ‘new normal,’ another phrase one hears a lot these days. Will the jobs that have been lost come back? Will people pick up old habits regarding going to restaurants, the movies, the doctor’s office, or sporting events? Will businesses return to their offices? And will their offices be the same size and in the same community? Another phrase you’re hearing — and will read in the stories that follow — is ‘pent-up demand.’ Many businesses, from eateries to colleges and universities to medical practices, are counting on it, but will it actually materialize? These are all good questions, and for some answers, we turned to a panel of experts for a roundtable discussion, without the roundtable. Collectively, they address the question on everyone’s minds: what is the outlook for 2021?

The Big Picture >>

Economist says pent-up demand will be the key to any recovery

Education >>

School presidents project multi-year emergence from pandemic

Banking >>

This CEO says some habits are changing, but are they permanent?

Accounting >>

This CPA is advising clients to keep the seat belt buckled

Healthcare >>

A Q&A with Baystate Health President and CEO Dr. Mark Keroack

Fitness >>

Business owners grapple with an industry battered by restrictions

Restaurants >>

Owner of large, regional group says it’s survival of the fittest

Technology >>

IT expert says it’s time for businesses to move from survival to growth

Retail >>

Big Y’s Charlie D’Amour reflects on 2020 — and the year to come

Opinion

Editorial

The calendar no longer says 2020.

And that’s a really good thing. Over the past 10 months or so, those four numbers became synonymous with pandemic, challenge, uncertainty, and more challenge. Turning the calendar over helps psychologically, but it doesn’t change the equation. Not yet, anyway.

In fact, as the experts interviewed for our Economic Outlook section indicated, while there is indeed a light at the end of the tunnel, there is still quite a bit of tunnel to get through. If this is the beginning of the end (of the pandemic), the end is still a ways off.

And, in some ways, there’s a good chance things will actually get worse before they get better, because, as some experts noted, the relief that many companies received through stimulus initiatives will not be there, or there to the same extent, like they were in 2020. So many businesses will be facing a reality check, and a scary one at that.

But if 2021 looks daunting in many respects, we can look back at 2020, not for painful memories, or only painful memories, but also for inspiration.

Indeed, as we’ve written on several occasions, the best thing about 2020, from our respective, was the manner in which the business community responded to a crisis truly without precedent. Going back to the middle of last March, we wrote about how business owners in this region had been through a lot over the past few decades — recessions, including a ‘great’ one; a tornado; the sudden quiet after 9/11; Springfield’s fiscal meltdown; and so much more. We wrote that this pandemic would be unlike any of those and would test the mettle of this region in ways we could not have imagined.

We were right about that, but we were also right when we said this region was up for the fight. It was, and it is, and a look back at 2020 proves this.

Yes, some businesses have been lost, mostly in the retail and hospitality sectors, and the losses have not been insignificant. Meanwhile, a number of mainstay businesses have been battered and bloodied — MGM Springfield, the Basketball Hall of Fame, the Springfield Symphony, the Thunderbirds, Union Station, UMass Amherst and all the colleges and universities, every restaurant and performance venue in the region … the list goes on.

But they are still standing, and, in the meantime, a large army of small businesses have responded with imagination, perseverance, and the entrepreneurial spirit that has defined the region for more than 250 years.

We’re told many of these stories over the past nine months, and they have been inspirational. Businesses that found themselves struggling, through no fault of their own, discovered ways to pivot, find new revenue streams, and, in some rare cases, actually expand and grow their businesses.

If there was any bright spot to 2020 — and there were not many — watching this collective display of courage and determination was it.

And now that the calendar has turned to 2021, nothing has really changed. The operating environment is as challenging as ever, and even moreso for most hospitality businesses, now that winter has set in.

The next few months may be the most difficult yet, but we are confident that those same qualities that helped businesses ride out 2020 will enable them to continue the ride — until the day when ‘normal’ returns and the predicted pent-up demand will provide a much-needed lift to ventures across all sectors.

As the new year begins, the light at the end of the tunnel is still a ways off. But at least we can see it.

Opinion

Opinion

By Brooke Thomson

Associated Industries of Massachusetts (AIM) has worked tirelessly with elected officials on both the state and federal levels to moderate a potentially disastrous 60% increase in unemployment insurance rates next year and to keep the Unemployment Insurance Trust Fund on sound financial footing.

Last month, Gov. Charlie Baker took a major step toward addressing that issue by filing timely legislation to ensure a two-year schedule freeze and provide the ability to bond the remaining trust-fund deficit and allow it to be rebuilt over time.

Meanwhile, AIM continues to support efforts by the Massachusetts Congressional delegation to persuade Congress to provide additional resources for the state’s Unemployment Insurance Trust Fund. The $900 billion economic stimulus bill recently approved in the U.S. Congress does not provide money for state UI systems, though it does revive the Paycheck Protection Program with $284 billion to cover a second round of PPP grants to especially hard-hit businesses.

Massachusetts businesses now need elected officials to stabilize the state’s unemployment-insurance system by freezing the statutory rate and allowing Massachusetts to authorize bonding.

A day before Baker filed his rate-freeze bill, AIM provided a statement to the entire Massachusetts Legislature calling for a freeze on employer UI tax-rate schedules to shield Massachusetts employers from the upcoming rate spike, which is tied by statute to the overall condition of state UI Trust Fund.

Given the unforeseen economic shutdowns brought on by the COVID-19 pandemic beginning in March, the Massachusetts Department of Unemployment Assistance projects that the fund, primarily financed by direct and reimbursing employer contributions, will be in the red by $5 billion at the end of 2022 and remain insolvent by about $3 billion as far out as 2024.

These initial numbers, left unchecked, would trigger an increase from the current 2020 employer tax rate of Schedule E, or $539 per employee, to Schedule G, about $866 per employee, reflecting an almost 60% increase.

Baker’s bill would freeze the employer tax rate at Schedule E for the next two years, slowing annual employer contribution growth to $635 in 2021 and $665 in 2022.

AIM thanks Gov. Baker for filing this legislation, and we appreciate the speedy action that the House and Senate have taken throughout this pandemic with legislation to stabilize the unemployment-insurance system for employers and employees.

We urge the House and Senate to take urgent action on this proposed legislation to freeze rates and fund the system through bonding, which will ensure that all claims are paid to individuals, that the trust fund is stabilized with a low-interest loan, and the Commonwealth is able to avoid a statutorily triggered unemployment-insurance tax-rate hike in first months of 2021.

 

Brooke Thomson is executive vice president for Government Affairs at Associated Industries of Massachusetts.

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