|Raymond G. Torto, chairman, AIM Board of Economic Advisors (Josh Reynolds for The Boston Globe)|
20 years of tracking confidence
In 1991, with New England mired in a deep recession and facing an uncertain outlook, Associated Industries of Massachusetts launched its monthly Business Confidence Index to track the sentiment of Massachusetts employers and prospects for the economy. Twenty years later, conditions are again uncertain and the index, which marked its anniversary this month, is still tracking business confidence. Raymond G. Torto, global chief economist for CB Richard Ellis Group and chairman of AIM’S Board of Economic Advisors recently spoke with Globe reporter Megan Woolhouse about the chances of recession, what it will take for businesses to hire again, and the nation’s unpredictable political environment.
Do you think the economy is headed into another recession?
That’s what everybody is trying to figure out. There’s uncertainty; no one can predict what’s going to happen. Everybody is downgrading their [economic] forecasts. How could things get better? If we had some decision making, some real leadership, coming out of Washington.
What policies do you think would promote job creation?
That’s a tough one. I’m a Keynesian, and I do believe you need some stimulus. The last stimulus was too general; this would have to be more focused on infrastructure. No one can deny we need that, and job and skills training.
Consumer confidence has been battered with talk of a double-dip recession. What’s the current mood among Massachusetts businesses?
I would say it’s a neutral mood. The uncertainty we see on the national level we see here - that’s what the index has been showing us for a couple months. If you went back to 1991 and asked businesses what’s your view of the US economy relative to the state’s, they would have said the US is doing better. Today, they’re much more positive on the Massachusetts economy.
How will state and federal spending cuts affect Massachusetts?
We’re trying to figure out where they’re going to be. Some are going to affect the health care and education industries we rely on here, but I don’t know yet. It’s part of the uncertainty.
What’s your view of Standard & Poor’s downgrade of US credit?
It didn’t matter that much. US bonds went up in value. It’s one of the great ironies - they must be sitting there wondering, ‘Gee, do we matter?’ [But] you have to give a bit of credit to people raising the issue that we’re spending more than we’re taking in and it’s got to stop at some point.
It all comes down to a question of confidence and what’s going to happen with regard to the committee of 12 [members of Congress negotiating further budget cuts]. There can be some very dramatic effects if they don’t come up with a plan. That is pushing businesses and consumers to be a little bit cautious in what they do. And that feeds on itself and it slows the economy. We’re at stall speed.
So what will it take for businesses to begin hiring again?
I’m sitting here with positions I would like to fill, but also with a concern about what’s going to happen if the ‘Gang of 12’ doesn’t make a decision. What will that do to the economy and to my business? I have these questions and until we find answers, I will slow down the process by which we hire.
I’m sure many readers will want to know what job openings you have.
They are jobs that require a master’s degree in economics and are in the real estate business.
Why should Massachusetts residents care about Europe’s debt crisis?
Close to 27 percent [of Massachusetts] exports go to Europe. We’re watching that very closely - if their economy continues to sink, it’s going to affect businesses here.
How has the stock market’s volatility affected the commercial real estate industry?
We deal with the institutional side - pension funds and investment managers buying office buildings. There is a lot of capital that wants to go into that type of real estate.
If you look at the numbers, commercial real estate has been bouncing back. Money coming out of the stock market and into real estate is a phenomenon that’s going on. Investors are getting tired of the markets jumping up and down.