Bay State business leaders assess the situation
Before there can be a successful strategy to fight through economic crisis, there needs to be good intelligence from the front lines. The Boston Globe turned to local business leaders to ask: What are the biggest challenges facing the country and Massachusetts, and what needs to be done to overcome them?
Chief economist at research and consulting firm IHS Global Insight of Waltham and author of "Spin-Free Economics."
The single biggest challenge facing the US economy today is limiting the depth and duration of the recession we are in. This downturn is likely to be bad, with the unemployment rate rising to at least 8 percent by mid-2009 [it measured 6.1 percent in September]. With interest rates already low, and bank rescue packages already in place, there is not a lot more that the Federal Reserve Bank can do.
So, more fiscal stimulus is needed, to the tune of $150 billion to $200 billion, at a minimum. The biggest bang per buck will be achieved if the stimulus is delivered through extra spending on infrastructure and aid to cash-strapped state and local governments.
The single biggest challenge for New England is keeping its competitive edge in industries of the future such as high tech and biotech. This will mean providing tax breaks for companies in these industries to locate in this region. It will also require continued investment in education (kindergarten through college) and upgrading infrastructure (transportation, telecommunications). The short-term need for fiscal austerity should not be accomplished at the expense of these longer-term goals.
ROBERT E. GALLERY
Massachusetts state president of Bank of America Corp.
Obviously it's difficult for everybody, and we're prepared for that to continue for several quarters. At the same time, we're seeing the other side of this, and we're very much open for business. When you look at the city or the Commonwealth, we have a diverse and vibrant economic base. Look at our industries, universities, and healthcare institutions. We think the Commonwealth is very well-positioned to come through this cycle. We continue to attract and retain younger workers, and obviously it's more possible for people to get into housing now.
Now, there isn't a family who hasn't seen what's happening with their invested assets, or seen the consumer spending numbers that are coming out. People are being cautious, and of course, and that will ripple through the economy.
Founding managing director of venture capital firm Fairhaven Capital of Cambridge.
Our generation is being tested by economic turmoil, the likes of which we haven't seen for nearly 100 years. The underlying problems are neither short-term nor sector-related. They are fundamental economic problems that could take years to correct.
Many good companies are hunkered down, focusing on how to make it through. Others may find themselves falling victim to "bottom fishers" looking for bargains.
Given the unprecedented nature of today's situation, it is easy for people to become overly negative. But, just as it may have been wrong to get swept up in the exuberance of the past few years, it would be a mistake to write down investments too quickly today. Companies and venture firms must maintain a prudent and balanced view of the current challenges and the opportunities that lie ahead.
The road ahead will not be easy. In the near term, we are likely to experience more dislocation as the effects of the economic downturn reverberate through all industry sectors and geographic regions. But, as in the past, the cycle will turn - things always do - and you can be sure that New England innovators will once again play an important role in the next great growth period.
Executive vice president of 1199SEIU United Healthcare Workers East, which represents more than 300,000 members and retirees.
One in six Boston jobs is in the healthcare industry. A key to protecting the local economy is improving these jobs.
Ensuring caregivers in our top industry receive good wages for hard work is not just a matter of fairness. For the local economy and the neighborhoods of Boston, it is the most direct economic stimulus package possible.
Chief executive of Legal Sea Foods Inc., based in Boston.
This is my fourth recession and while each has its own nuances, they all boil down to the same challenge: there are too many seats in any given market and not enough guests. The Darwinian concept "survival of the fittest" clearly applies. At the end of the day, those of us who are offering great value to our guests will prevail.
The strategy to use in battling an economic downturn is not overly complicated. Restaurant operators need to show a nearly fanatical commitment to our core competencies and brand values. We must leverage our strengths to best serve an increasingly discriminating guest base.
Regardless of the industry, recessions are never easy; but, inevitably, surviving one always makes us better operators.
Chief executive of Mullen, a Wenham-based advertising firm.
We have entered a global recession, and advertising and marketing services are recession-sensitive industries. Consumers reduce spending and marketers cut back because no one is buying. The result in our business is that revenues decrease, margins get squeezed, and employment shrinks.
Some companies will go out of business; a few will buck the trend. But the entire chain will be affected, and no one will be immune - not new media, old media, or anything in between. And when it's all over, our industry will have been restructured, locally and nationally.
For me, it's no longer about, "It is what it is." Rather, it's about, "It is what we make it."
That means building a great company and brand for the future that also performs in the here and now. It involves constructing a brutally honest assessment of the next 12-18 months; recalibrating the organization to that assessment; articulating a vision that our people embrace and that excites them; and having people who pursue that vision with great focus and genuine enthusiasm.
Most great fortunes are the products of bad times. And so, for us leaders, it's time to stop defending the past and time to start creating the future.
Jenn Abelson, Robert Gavin, Ross Kerber, Robert Weisman, and Jeffrey Krasner of the Globe staff contributed to this story.