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“I would have never thought something happening half across the world would affect our business. It’s pretty mind blowing,” said So, who operates two Boston restaurants and six food trucks.
At the same time, So expressed a concern I kept hearing from other business owners who are watching the virus news gyrate stock markets and spook consumers.
“I’m more scared about the hysteria around the coronavirus than the actual virus,” So said.
Last August, when the stock market was in a breathtaking downward spiral and people worried about a recession, I took the temperature of nearly a dozen CEOs to see if they were bracing for bad times. The answer surprised me: No.
Recently, I went back to some of those same CEOs — and added some new ones to the mix. This time, they told me the economic outlook is less rosy than it was at the beginning of the year, but no one is preparing for doom and gloom.
Could the viral outbreak slow the global economy? Absolutely, they say. Could it slow the US economy? Probably, but not for long. Will the US fall into a recession? Read on.
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John Fish, CEO of Suffolk construction, was one of those executives who feels that the economy in the age of coronavirus could hit some speed bumps. Like So, he is preparing for the worst and doing contingency planning in case a construction site needs to be shut down or employees have to be quarantined.
“We’re very much in a gray zone,” said Fish, but “nobody should jam their foot on the brakes.”
Here’s what other Boston-area business leaders are saying about the economy, sector by sector:
Financial services
Karen Firestone has some advice to anxious investors worried about their 401(k) balances: “Don’t panic.”
She’s taking her own advice. Firestone’s Boston investment firm, Aureus Asset Management with more than $3 billion under management, has been selling some stock to lock in profits while increasing holdings of others that have fallen sharply. The firm recently increased its positions in Amazon, Facebook, and Salesforce, and looking for deals. The firm, for example, is weighing whether to buy Align Technology, the maker of Invisalign clear braces, a stock that has been suffering because the company not only manufactures in China but has been expanding into the Chinese consumer market.
“You have to take these opportunities when you get them,” said Firestone.
Still, she doesn’t advise people to try this at home. Firestone has a team of analysts evaluating at what price stocks become attractive.
“I don’t think the average investor should do anything,” she said.
The massive sell-off on financial markets doesn’t surprise Firestone. She says many stocks were overpriced, and a correction made sense. As for a bear market – a decrease of 20 percent over a sustained period – she doesn’t see that happening.
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“It’s unusual to have a bear market without a recession,” she said. "That’s not in our equation.”
Venture capital
When I reached out to Boston venture capitalist Maria Cirino last week, she was at the RSA cybersecurity conference in San Francisco, where registration was down and key sponsors had pulled out amid Covid-19 concerns.
For more than a year now, Cirino, managing director of .406 Ventures, has been telling portfolio companies to prepare for a downturn. That means don’t go on a hiring or spending spree.
She’s forecasting more economic storm clouds now than when I spoke with her in August. The recent announcement by British bank HSBC that it would cut 35,000 jobs over the next three years struck Cirino as something of a warning.
“I haven’t seen something like that since 2008,” she said, referring to the throes of the Great Recession.
As for whether the US might fall into a recession this year, Cirino told me: “If I were a betting person, I would say yes.”
Autos
When you’re in the car business, you’re prone to being optimistic. Count auto magnate Ernie Boch Jr. in that category. So far, he’s not letting the volatile stock market get to him.
“I always believe in never make lasting decisions from the market when it’s super high and when it’s super low,” said Boch. “You have to be pragmatic.”
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But he is keeping an eye on the number of customers coming through showrooms, and whether banks are tightening up on auto loans.
His biggest concern is how the coronavirus might disrupt the auto supply chain and whether that would affect inventory. To contain Covid-19, the Chinese government shuttered factories for a period of time.
“If you are building a car and you need a hundred parts and you only have 98, you can’t build a car,” said Boch.
Banks
Like other CEOs, Sushil Tuli, who runs Leader Bank, needs to battle coronavirus on two fronts: the work place and the bottom line.
Tuli has been strategizing on how to handle a quarantine. He’s making sure all 250 employees have a laptop in case anyone needs to work from home for a prolonged period. And he is rolling out cross training in case an entire department gets hit with an outbreak. For example, employees in the wire transfers unit are learning how to handle deposits, and staffers in deposits are learning how to conduct wire transfers.
Fears of an economic slowdown triggered by Covid-19 has pushed the 10-year Treasury note to a three-year low, which has translated into lower mortgage rates. Leader Bank is a major residential lender, so over the last month it’s been dealing with a lot customers scrambling to refinance. Tuli has hired temporary staff and is having employees work overtime to meet what he calls a “refinancing boom.”
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“It’s unbelievable,” he said.
Like other executives, Tuli is not worried about a recession. He is, however, concerned about the commercial real estate market. He said wealthy people from China and other countries like to buy investment properties in Massachusetts. A major viral outbreak could slow those transactions, and that could ultimately drive down sales and commercial real estate prices overall.
“What I worry about is the value of real estate,” said Tuli.
Retail
Handbags, that’s what’s on the mind of Karen Hayes, a co-owner of Pretty Poppy, a women’s jewelry and accessories store with a location in Newburyport and Portsmouth, N.H. With many of her goods coming from China, the virus is disrupting the supply chain and orders are taking longer than usual to be filled. Factories may have re-opened in China, but not all of them.
People don’t shop as much this time of year, but starting in April customers might start to notice if Pretty Poppy has trouble stocking up during the spring selling season.
“We’re going to know a lot in the next 30 days,” said Hayes on inventory levels.
Hayes does not think Covid-19 will unnerve consumers because Americans “have really short attention spans.” She believes the fundamentals of the economy are good, especially the low unemployment rate in Massachusetts. Her take: As long as people are working, they will be shopping.
Hayes believes what keeps the economy humming may be as simple as this: “Wash your hands, people.”
Shirley Leung is a Business columnist. She can be reached at shirley.leung@globe.com. Follow her on Twitter @leung.
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