Worcester Business Journal

wbjournal.com | October 14, 2024 | Worcester Business Journal 13 B A N K I N G & F I N A N C E F O C U S Member FDIC Member DIF Simply Be er. BANKING BUILT FOR YOUR BUSINESS Tailored solutions to drive your success! Commercial Loans, Cash Management, Deposit Accounts, Digital Banking and More! Call our experienced lenders at 800-649-3036 or email us at commercial@saversbank.com. Learn more about business banking at saversbank.com/business-banking or scan the QR code. loan was 13.5%," he said. "If you think about a 15-year SBA loan at $300,000 and you reduce that APR by just a quarter percent, it reduces your inter- est over the life of a loan by $9,000. For small businesses, that's more than just pocket change." Consumer-focused businesses both big and small are hopeful shoppers will be ready to open their wallets even more than they have been, he said. "Inflation has been so front of mind for consumers," said Geehern, noting consumer spending had been surpris- ingly resilient even with the high inter- est rate. "It hits you everywhere. It hits you when you go to Dunkin' Donuts. It hits you when you go to the grocery store. From a psychological stand- point, the sense that at least things are turning around will certainly help consumers." is holiday season hopefully will be a solid one for businesses, aer several years of uncertainty, McGovern said. "My guess is it'll be a strong holiday season, but it won't break any records," she said. "As much as they hear about how bad the economy [supposedly] is, people are still going out to dinner and going on trips." Cautious optimism Interest rates are an important in- fluence over the economy, but they are not a major lever; global political strife and a myriad of other factors have the potential to undermine any positive impacts seen in the Central Massachu- setts economy. Despite the hopeful predictions for a positive impact from the rate cut, widening international conflicts and potential fallout from the upcoming presidential election results are still on people's minds. "Inflation and interest rates are two very important variables, but there's a whole lot of other stuff going on right now too that's far away but still impacting us locally," McEvoy said. "Geopolitical considerations, election uncertainty, all of those things that they make up, kind of a tapestry of impacts." While not a magic bullet for the economy, there are other positive indi- cators the economy is on solid footing post-cut; jobs figures for September released by the U.S. Department of Labor on Oct. 4 showed 254,000 jobs added in the month. Just like the size of the federal rate cut, this number surpassed the predictions of economic forecasters. "e jobs report was very favorable, and that's positive for the economy," said McGovern. "e last two months, job production across the country has been healthy. e unemployment rate is down. So the economy seems to be responding positively to the cuts." We aren't planning any major purchases. On Sept. 18, the Federal Reserve cut interest rates for the first time in four years, lowering rates by 0.5 percentage points. As a result, banks including JPMorgan Chase, Bank of America, and Wells Fargo reduced their prime rates. With two more Fed meetings left in 2024, economists foresee interest rates continuing to trend downward. The Fed had been keeping interest rates high in an effort to fight inflation and slow the economy by increasing the cost of borrowing. By lowering rates, the Fed hopes to stimulate economic growth by encouraging businesses to make major investments in people and property and address a softening labor market, which has seen unemployment rates slowly tick up. When polled online, the majority of WBJ readers said they weren't planning on making any large purchases in the near future, despite the change in interest rates. Is your business planning on making major purchases as interest rates decrease? Yes, we've been holding off on large purchases and are looking to take advantage of lowered rates. Yes, but lowered interest rates are a coincidence as we were planning on making the purchase anyway. No, we would like to, but we are not in the financial position to make large purchases even with lowered rates. No, we don't have any plans to make major purchases. 16% 12% 24% 48% W

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