Metrowest economy: Still on the upswing
If economic experts are correct, the Metrowest economy will continue to move ahead in 2006, despite nagging worries over energy prices and housing costs.
That was the consensus of panelists participating in a February 7 Economic Forecast breakfast at the Wyndham Westborough Hotel. Still, participants in the event, sponsored by Sovereign Bank and Genzyme, pointed to several forces that could slow business.The results of a recent survey showed that the cost of energy is the number one concern of businesses and consumers, said Patrick Sullivan, Sovereign’s market CEO in Massachusetts. "Only 22 percent say their financial situation has improved," said Sullivan, "which is a 9 percent drop over last year."
Also commenting on the cloudy energy outlook was David Mannherz, executive VP of Noresco. "What we’ve seen is a huge increase in demand for natural gas without the associated increase in supply," said Mannherz, who noted that natural gas prices have doubled in two years.
Businesses are exercising caution, said John Merrill, market president of commercial banking for Sovereign MA. Among his observations:
• Rising pressures on cost and contracting margins are causing companies to scrutinize expenses.
• Companies are investing more on software and other productivity tools.
• Massachusetts remains the third most expensive state for business.
On the healthcare front, $400 million in federal reimbursements will be lost if a Massachusetts healthcare reform plan fails to develop, warned Charles Baker, president and CEO of Harvard Pilgrim Healthcare. "I would say it’s 50/50 right now, if we’re going to see a reform plan," said Baker, who also cited other key trends affecting healthcare, including:
• Increased physician spending on medical malpractice insurance.
• Continued wage increases due to shortages of nurses and technicians.
• Growing popularity of generic drugs.
Despite such concerns, panelists did not see the Metrowest economy dipping into recession in 2006.
Jeff Lavery can be reached at jlavery@wbjournal.com
WBJ Web Partners
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