Last week’s jobs report was disappointing, the Dow had its worst month in two years, and everyone is skittish about Europe. With the economic recovery feeling more fragile than ever, we asked business leaders at Boston College’s Chief Executives’ Club of Boston luncheon Tuesday to talk about how the uncertainty is affecting their companies.
RICHARD E. HOLBROOK
CEO, Eastern Bank
Hoolbrook said political uncertainty is the number one risk to the US economic recovery as it remains unclear whether a closely divided Congress will act on key policy questions.
“The automatic budget cuts that are going to take place, the cessation of Bush’s tax cuts — both of these together will have a negative affect,” said Holbrook.
And then, of course, there’s the European debt crisis. “If Greece comes out of the euro, it may or may not be a good event,” Holbrook said.
Holbrook said there is a chance the nation could slip back into recession. “I wouldn’t put [the possibility] much higher than the 25 percent range.” But, he added, “If Congress is unlikely to address our deficit and our tax situation within the first six months of 2013, the chances are much higher.’’
ADELENE Q. PERKINS
CEO, Infinity Pharmaceuticals
Innovation will be key to keeping the United States from another recession, according to Perkins, whose Cambridge firm makes cancer drugs.
“Overall, innovation and access to capital are critical to driving the economy,” she said. “We need to be global leaders in advancing new technologies. If we don’t do that, we will stagnate and see a new recession.”
Infinity has six clinical trials in the works, Perkins said, and enough capital for the moment. But she acknowledges that her industry will need help to flourish and continue making the kind of drugs that “really make a big difference.”
“Anything that introduces a lot of regulatory requirements is tough for businesses,” Perkins said, “so we’re looking for less regulatory restrictions, and easier market access that will allow us to invest in innovation.”
ROBERT L. BEAL
President, Beal Cos.
While financial instability in the eurozone and China threatens the US recovery, Boston’s diverse economy and strong industry sectors are bolstering the business of his Boston real estate development firm, said Beal.
“Boston is probably the most stable economy in the US today because what drives our economy is our hospitals and our universities,” Beal said, “followed by life sciences and financial firms.”
Earlier this year, the company unveiled blueprints for remaking Downtown Quincy through a $1.6 billion project that will include high-rises, restaurants, and a public green. It is also working to help the Massachusetts Eye and Ear Infirmary expand into the Longwood Medical Area, where the specialty hospital will occupy a building constructed and leased by the Beal Cos.
President, Boston Scientific Corp.
With about one-quarter of its sales in Europe, Boston Scientific is feeling
the impact of the debt crisis there. “With the European austerity measures, we see the slowdown in health care,” said Mahoney.
Patients are also concerned about missing work, he added, and they are “less anxious to have some procedures.” The Natick company sells a variety of products in Europe, including coronary stents and pacemakers. Europe does have a bright spot: an aging population, which means more people will have health care needs.
With concerns over Europe, Boston Scientific is expanding elsewhere, such as in Asia and India, to keep growing. “We are hiring more in our faster markets,” he said.
ROBERT L. REYNOLDS
Chief executive, Putnam Investments
For Reynolds, reining in the US deficit is a key to long-term prosperity, but not the only one.
“Obviously, we have to control spending and find ways to make the economy grow. It’s not just through austerity -- austerity alone does not work,” Reynolds said. “You have to find some strategy to grow.”
While he called the possibility of another recession “highly unlikely,” Reynolds said businesses like his mutual fund company can’t afford to ignore the financial struggles happening in Europe and elsewhere.
“We’re a global manager, so what happens around the world affects us. [Even so] we’re still optimistic about the growth potential around the world,” Reynolds said. “We’re so bullish on the US in the long term, but I will say it’s not a given. We have to control our spending.”
Chief executive, The Herb Chambers Cos.
Chambers, who owns nearly 50 auto dealerships in Massachusetts and Rhode Island, doesn’t think another recession “is likely at all.” Besides, he adds, a looming recession is “negative stuff that I can’t think about.”
Chambers said the biggest risk to the economy is consumer anxiety triggered by the European economic crisis and resulting stock market tumult. The combination, he said, “can cause people to stand still instead of buying a car or a house.”
As for his own business, Chambers said he’s trying to “level off” after four years of expansion.
Currently, he said, “we have 15 to 20 percent more people than we had four years ago. We’re trying to maintain our current level but drive sales up.”
Chief executive, Blue Cross Blue Shield of Massachusetts
The state’s largest health insurer doesn’t have direct exposure to Europe, but some of the businesses that buy insurance from Blue Cross Blue Shield of Massachusetts do.
“The uncertainty in Europe is front of mind,” said Dreyfus.
That could eventually have an impact on Blue Cross if businesses grow more cautious about expanding and hiring. Fewer employees means fewer new members signing up for health insurance.
“One of the few ways we can grow is for our customers to grow,” Dreyfus said.
As to whether the global economy could pull the US back into a recession, Dreyfus said that’s hard to predict.
“It’s unlikely because we have internal protections that guard against that,” he said, but “we are very much increasingly part of the global economy.”