Uncertainty over federal debt creates worries for Mass. business, economy

Uncertainty about the ongoing debt ceiling crisis has some Massachusetts businesses delaying expansion plans and putting off hiring new workers, analysts said.

The political crisis in Washington has many worried that Massachusetts’ economic recovery could be derailed. Robert Baker, president of the Smaller Business Association of New England, said small businesses that are poised to expand are putting plans on hold because of the uncertainty.

“Psychologically, this [debate] has started to create a level of unpredictability that can unravel the seeds of growth,’’ Baker said.

If Aug. 2 arrives without a deal and the nation defaults on its debt, the federal government’s credit ratings would be lowered. Officials are forecasting that a variety of government payments, including Social Security checks, could be be jeopardized, and damage to the economy would be widespread.


Massachusetts draws more than $200 million in federal reimbursements each week for programs ranging from food assistance to Medicaid, which provides health insurance for the poor. State legislators have warned that delays in payments will cause a “serious state cash flow issue.’’

Bank of America, the state’s biggest bank, said it is monitoring the situation closely. “We’re looking at how it effects the economy first and foremost, how it affects the company and how it affects our clients,’’ said bank spokesman Jerry Dubrowski.

Dubrowski said the bank hasn’t seen any impact on the economy or interests rates, since it still appears political leaders in Washington will reach agreement to avoid default. But he suggested that bank is making contingency plans “I can’t really get into specifics,’’ he said, “but we are doing the work that would expect us to do.’’

TD Bank, the fourth largest bank in the state, also said it hasn’t seen any impact yet. “We are currently reviewing our options and deciding the best approach for our customers and the bank,’’ said TD Bank spokeswoman Rebecca Acevedo.


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