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Economy
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slowed markedly in recent months, with most all refinancing of home mortgages complete and com- mercial loans in the post-PPP era being relatively stagnant.
“For what should be a very robust economic envi- ronment, we’re not seeing the equivalent loan oppor- tunities on either the commercial or residential side,” he said, adding that the rising interest rates, coupled with low inventory and soaring prices, are certainly impacting the latter. “We’re not seeing a lot of loan demand; we’re doing what we can to find it, but it’s challenging for us right now.”
And this lack of loan activity will certainly have an impact on interest paid on deposits, he said, not- ing that while one might assume that these rates will rise naturally as the Fed increases interest rates, they won’t if loan activity remains stagnant.
“We’re coming off a time when banks have a ton of cash because of all the government stimulus that’s been flooded into the market,” he explained. “So they have a ton of cash on their balance sheet and not a lot of loan demand, so it’s going to be very difficult for them to pay higher rates on deposits unless they can turn that cash into loans.”
And the loan market is just one of the many things to watch moving forward, he went on, adding that the sluggishness in that area is a symptom (one of many) that the inflation being witnessed is a prod- uct of government policy and other factors — supply chain issues, workforce shortages and resulting high- er wages among them — rather than the economy being hot and in need of being cooled down.
“I don’t think gas prices or the cost of groceries are really being impacted by consumer spending,”
Hadley
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“When I came to Western Mass I saw lots of col- laboration and a sense of commitment for each other to succeed,” said Bordenca. “I just didn’t see that kind of collaboration in Eastern Mass.”
The two organizations currently have 61 employ- ees, with Bordenca serving as CEO for both entities. DESCO has a national presence with an office in Miami and field technicians who work from home in various states. She was able to coordinate the compa- ny’s move to Hadley without losing any employees.
“We’re looking to triple in size over the next five years,” Bordenca said. “We want to share our culture and our ability to build teams and create engage- ments to other states.”
When BusinessWest spoke with Bordenca she was planning a ribbon cutting and open house to intro- duce more people to IGL and DESCO. To illustrate what happens at DESCO, a service technician will hold a demonstration at the open house of how they service a sterilizing machine. The technician will also work with something more familiar to most people, an ice machine — DESCO also services ice machines for restaurants, hotels and surgery centers.
“On the training side of Venture Way, I’ve invited local speakers to talk about the work they’re involved in to begin a dialog about the ways community mem- bers can help affect change together,” Bordenca said. “This is the first of many events like this and we’ve begun lining up great local leaders to present in the coming months.”
One way Bordenca sees Venture Way helping DESCO is by training a more diverse workforce to step in as older workers retire. She admitted that technicians in the industry have traditionally been mostly white and male.
“We want to make sure our industry is visible to all genders and races,” she said. “At Venture Way we
he said. “I think those things have been impacted
by government regulation, supply chain, and cost of wages — grocery stores paying $17 an hour for kids to bag groceries because they can’t hire people at lower wages because there’s no one to hire.”
“It’s all been reactionary to the pandemic — every- thing right now seems to be incredibly artificial,” he went on, adding that, for this reason, the Fed’s inter- est-rate hikes might provide a real, unfiltered look at what’s happening with the economy. “We have arti- ficially driven rates on the short term, and the Fed also manipulating rates on the long end with their bond purchases. If they can start shrinking their bal- ance sheet, and raising interest rates on the low end can normalize the yield curve, and then get out of the markets, then we can see what’s really going on.”
Still another thing to watch is how quickly and profoundly interest rates are increased, he said, add- ing that, in the past, when rates rise quickly and in large doses, the Fed has had to back off and reverse course in an effort to pick up a slowing economy.
Nakosteen agreed, and noted that there are many factors that go into inflation, some of which are likely to be impacted by rising interest rates — such as the spending spawned by government-awarded money in the wake of the pandemic — and some not.
“It’s a complicated picture,” he said. “And inflation is more complicated than I’ve ever seen it.”
Looking back to see if there was a time to compare all this to, Nakosteen said there were many similar attempts to slow the economy, but perhaps none at
a time when there were so many issues clouding the picture.
“It’s a bizarre mixture of factors,” he said. “There’s COVID, the war in Ukraine, the aftermath of all the stimulus ... it’s a strange mix.”
“Hadley is more centrally located to serve customers throughout the Northeast in places like New York and Vermont,” Bordenca said. “This location makes us feel closer to our employees and our customers in lots of ways.”
can expose people to what we do and even offer mini courses so more people can get a taste of this as a career.”
Large numbers of workers reaching retirement age is happening in all professions. Brennan said it’s an ongoing challenge for Hadley.
“In the next few years, we will see a significant number of highly skilled, intelligent workers retir- ing and leaving with lots of historical knowledge about the town,” Brennan said. “The real challenge is encouraging younger people to work in municipal government.”
Brennan is working on a more robust intern- ship program between UMass and the town to introduce public policy majors to the workings of a municipality.
“Once people start working with a municipality, they’re hooked for life,” Brennan said, relating to her own experience where, after working in municipal government, she took a job in the private sector for a short time but could not wait to get back into munici- pal work. “I was hooked, and we just have to get new people hooked.”
And despite this mix of factors, or headwinds, business owners are generally upbeat, as indicated in the upward movement of the BCI, which Regan explained this way:
“When things are going badly, the BCI usually predicts that. Despite all the negative stock market activity and the presence of significant inflation pres- sures, along with continuing supply chain issues and the challenge of securing a workforce, the index is in significantly positive territory.
“When you look at the BCI and some of the other things that are happening, it’s hard to reconcile, other than to say that the people who are responding to the survey feel very confident about how they are doing and how they perceive conditions for their own oper- ation,” he went on, adding that the next reporting of the BCI will be watched with great interest.
The Bottom Line
Looking again at the complicated picture that is the national economy, Nakosteen said that, histori- cally, efforts by the Fed to slow inflation by raising interest rates usually take six months or more to reveal their true efficacy.
But in this case, such initiatives have been designed to speed that process, he said, adding
that he’s not at all sure whether they actually suc- ceed in doing that — or whether they will succeed at all, given the many question marks concerning the nature of this historic inflation.
Overall, the always complicated task of projecting what will happen with the economy has become that much more difficult. In other words, stay tuned. u
George O’Brien can be reached at [email protected]
Pazmany, who recently took part in a workforce- strategies panel, said a trend is emerging where mod- ern workers want to be part of something bigger than just having a job and are more concerned about a community focus in their work.
In her role at the chamber, Pazmany makes many direct connections among area businesses and has found new ways to help employers fill positions.
“Members are allowed to upload job listings, which we then upload to our social media sites,” Pazmany said. “We’ve posted hundreds of jobs in the past several months.”
Experts in Their Fields
Bordenca said she’s excited about moving DESCO to Hadley, calling it the perfect location for what the company does.
“Hadley is more centrally located to serve custom- ers throughout the Northeast in places like New York and Vermont,” Bordenca said. “This location makes us feel closer to our employees and our customers in lots of ways.”
Perron concurred, noting that Hadley is a town that works well for his restaurant. He also gave credit to the current Hampshire Mall management as the best he’s seen in well over a decade.
“I like being a tenant here because the mall man- agers are very good about working with us and caring about us,” Perron said.
He’s also encouraged by the continued growth of the Route 9 corridor and the number of people it brings to the town.
“I see an uptrend happening here,” said Perron, who is clearly not alone in that assessment. u
BusinessWest
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