Page 18 - BusinessWest January 8, 2024

on interest-rate increases,” he said. “At worst, we are hoping for no further increases, which should help the housing and commercial real-estate markets. At best, some predict lower rates, and, quite frankly, many consider equity markets to be overreacting to this potentially good news. We’re not out of the woods yet, but hopefully we are in for a soft landing as recessionary fears seem to be easing.”
Elaborating, Senecal said that much hinges on inflation and the needle con- tinuing to move in the right direction.
“Everything points to price stability, and as long as price stability continues, we should see a stabilization of interest rates,” he explained. “As long as inter- est rates stay high on mortgages, the housing market will continue to have a ripple effect throughout our economy. Not only are housing sales down, but all economic activity related to homebuying and construction has been severely impacted.
“Overall, I’m optimistic that the pieces are coming together, and that we’ll see more progress in 2024.”
RICK SULLIVAN
“Several national economists and the Federal Reserve are expressing cau- tion and a non-commitment about the direction of interest rates,” he went on. “Equity markets seemed to react extremely quickly to the interest-rate pause as good news. I am not so sure that we will see any change in interest rates. I think rates will remain stable throughout the year because the Federal Reserve is extremely cautious in any move, up or down, until they have clear signs that the economy, inflation, and employment are back to pre-pandemic levels.”
“It’s imperative that policymakers send the right signals through their actions that we’re going to continue on this course of enhancing our competitive- ness and promoting economic stability.”
BROOKE THOMSON
Overall, Senecal sees improvement on the residential real-estate market, but some lingering challenges, many of them pandemic-related.
“With the recent Federal Reserve pause, and the market’s reaction to that, it has started to impact long-term interest rates on mortgages coming down almost three-quarters of a percentage point,” he noted. “I would expect and hope the impact on the residential real-estate market come spring will have a positive effect on inventory and therefore increase residential RE purchases and inventory.”
Meanwhile, he added, “commercial office-space markets will continue to see a continuing decline as the effects of the pandemic on lease maturities will con- tinue to impact commercial real-estate values. Because Western Mass is heav- ily concentrated in the medical and educational markets, neither of which are severely impacted by these interest-rate economic changes, I fully expect West- ern Mass. to remain economically stable throughout 2024.”
Progress Report
It’s called the CHIPS and Science Act. This is a federal statute signed into law by President Biden in August 2022 that authorizes roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the U.S., and also includes $39 billion in subsidies for chip manufacturing on U.S. soil, along with 25% investment-tax credits for costs of manufacturing equipment and $13 billion for semiconductor research and workforce training.
Rick Sullivan, president and CEO of the Western Massachusetts Economic
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