Page 6 - BusinessWest September 2, 2024

Ken Vincunas says many business owners are hitting pause until they see what happens with interest rates — and the November election.
mostly because consumers, by and large, have continued to spend. However, there are signs that spending is slowing and that con- sumers are now increasingly burdened by their previous spending.
“When you look at the number of people who are maxed out on their credit cards, for example, credit-card delinquency rates, stu- dent-loan delinquency rates ... these are all examples of metrics that are not trending in the right direction,” he said. “And they imply that consumers are pretty stretched.
“Whether they’re at the end of their ropes as a group is not clear,” Sosik went on. “I’m not saying that a consum- er-driven recession is around the cor- ner, but there are a lot of factors indicat- ing that the consumer is stretched out pretty far.”
Overall, though, that same consumer is still hanging in, he continued, adding that, historically, this is the case until there are cracks in the labor market, which have not appeared yet.
“If we see those, and you have unemployment rising with an already stretched-out consumer, then that would be a perfect storm,” he said, adding that he’s not predicting that such a storm will develop.
Vincunas is among those who believes the Fed hasn’t gotten away with it, and that higher interest rates are tak- ing their toll on business overall, but especially in commercial real estate.
He noted that higher rates are leav-
ing those facing loan-rate renewals with potentially huge bumps in operating costs.
“The window for their renewals could be five years, and five years ago, people might have thought they were in good shape,” he explained. “But now, they have to face that eventuality, and everyone is holding their breath to see if Trump can get elected and if he can bring interest rates down.”
Meanwhile, these higher rates are prompting more to lease rath- er than buy and for those thinking about buying or perhaps building new to hit pause and see what happens — in November and with interest rates.
“For at least seven or eight months, I’ve heard that the Fed should be lowering interest rates right now because higher interest rates are really going to drag down the economy. They haven’t. They may still, but they haven’t yet.”
BOB NAKOSTEEN
We’re here for
local business.
Ask us about:
• Commercial/Business Loans & Lines of Credit
• Business Deposit Accounts & Services
• Flexible Cash Management Solutions
• Robust eBusiness Solutions Business Online Banking • Business VISA® Debit & Credit Cards
• Industry-Leading Merchant Services
Unlock your potential
bankESB.com | 855.527.4111
Member FDIC | Member DIF | NMLS #: 405477
6 SEPTEMBER 2, 2024
<< FEATURE >>
BusinessWest