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Recession on the horizon? Local business leaders aren’t convinced

Roger Berkowitz, CEO of Legal Seafoods, has a unique way to forecast the economy: sales of hard liquor at his restaurants. Lane Turner/Globe Staff/File 2014/Globe Staff

Anyone paying even casual attention to the news knows the “R” word is back with a vengeance.

Fears of a recession sent stock markets in a downward spiral last week, and they have been up and down ever since. Who knows what tomorrow might bring?

Talk to business owners and leaders, as I have, and you’ll discover that hardly anyone is bracing for a recession. Sure, the economy is not as strong as it was last year, but it’s still humming. The biggest concern is that the hype about an economic downturn might make it our reality.

“The hyperbole is extreme,” said Karen Firestone, CEO of Aureus Asset Management, a Boston investment firm that manages more than $3 billion for individuals and institutions. “Everyone talks about recession and calamity, and meanwhile the market is up 18 percent, which is pretty amazing for a year in which everyone seems so scared.”

Ernie Boch Jr., the auto magnate, said his sales are flat, year over year, while overall auto sales in the United States are slightly below projections. Boch isn’t worried, because December is a big month for purchases — he can still finish strong.


“As a leading indicator of the economy, the auto business is tough but healthy,” Boch told me. “Am I putting up sandbags? No. I’m taking business as it comes and making smart moves. I’m not preparing for the worst.”

This is where I should point out that business types can be hopelessly optimistic, and recessions are notoriously hard to predict, even for economists.

Here’s the thing: The fundamentals of the US economy are sound, with consumer confidence high, unemployment really low, and inflation in check. Yet the pace of growth is slowing, trade war tensions are escalating, and stock markets are volatile.


Still, what’s remarkable over the course of nearly a dozen interviews with business leaders across a spectrum of industries is that despite the ominous headlines, nobody is panicking.

John Fish, the CEO of Suffolk Construction, acknowledges that “the footsteps of a slowdown can be heard,” but he’s not scaling back his business as he looks out over the next five to 10 years.

“It really comes down to your vision for the organization and how bold you want your investments to be so you can achieve your goals,” Fish said.

Here’s what other Boston-area business leaders are saying about the economy, sector by sector:

Venture capital

The closest I came to finding anyone flashing the caution sign was in the venture capital world. VCs have to place big bets on the next big thing, and the stock-market jitters are enough to give investors like Larry Bohn some pause when deciding whether to take a company public over the next 18 months.

“When the public markets sneeze, the private markets get pneumonia,” said Bohn, managing director of the Cambridge VC firm General Catalyst. “It doesn’t take a lot to make growth investors start to pull back.”

Bohn said investors aren’t coming to a dead stop, but “people are stepping on the brakes a little bit.”

Maria Cirino, managing director of .406 Ventures in Boston, continues to invest in early-stage companies, but she has been telling her startups for over a year that a downturn is coming. As a precaution, she advises them to be more prudent with hiring and spending.


“It’s not going to be an ice age,” Cirino tells them but “be prepared for it.”


Revenue at Legal Sea Foods is up slightly, year over year, says CEO Roger Berkowitz, who oversees an empire of 32 restaurants. He’s still looking at opening in new locations, but he tells me his “antenna is up” about a downturn.

Investors were focused last week on the so-called inverted yield curve, which has been a reliable predicator of recessions. That’s when interest rates on short-term bonds are higher than interest rates paid by long-term bonds. Translation: Investors concerned about what might be around the corner are moving money into bonds with longer timelines, driving those rates down.

Berkowitz has his own version of the curve: when hard liquor sales surpass wine sales. To him, that’s a potential indication the country might be heading into a recession, because his customers drink more of the hard stuff in tough times. And the imbibing is starting to trend in that direction at Legal Sea Foods.

“It’s up ever so slightly,” Berkowitz said of sales for more potent beverages such as tequila and vodka.

Real estate

The last recession started in the housing sector when lax lending standards triggered a global financial meltdown. Banks imploded, and people lost not only their jobs but their homes.

This time around, Carol Conway Bulman of Jack Conway & Co. is not seeing any signs the housing market is going to crash.


Prices are high, inventory is scarce, and interest rates remain low — a combination that makes a significant slowdown unlikely.

“You have the true supply-and-demand story happening here,” said Bulman, CEO of the full-service real estate firm, which has nearly 700 agents.

Bulman is confident in the strength of the market because of the particular dynamics at play: Older millennials and baby boomers are competing for the same homes. Here’s how: Millennials in their mid-30s are starting families and want to move to the suburbs, while boomers are living longer and staying put in their four-bedroom Colonials.

Since the last recession, Bulman said, the government has wisely tightened regulations to reduce irresponsible lending. Whatever happens to the economy, she added, “housing is not what is going to bring us into a recession.”


Sam King, CEO of Veracode, a Burlington cybersecurity firm, doesn’t deny that worries about a recession are on people’s minds. “Yes, very much so,” she said.

Still, she hasn’t altered the way she does business. That’s because she hasn’t seen any telltale signs at her firm: The pipeline of business opportunities remains robust, customers aren’t deferring decisions on spending, and there hasn’t been downward pressure on prices.

Even in a recession, King said, companies aren’t likely to skimp on cybersecurity, so her industry may be more insulated than most from a downturn:

“If I had to offer any piece of advice, go back to the fundamentals. You can’t go wrong with the fundamentals. Are you delivering something of value? Are you delivering something that is scaleable and manageable?”



Bruce J. Mittman, a Needham businessman who owns radio stations and an advertising agency, said he “cringes at hearing about a recession that isn’t there.”

He believes the economy is about confidence — and right now the media and the Democratic Party are too focused on a possible meltdown.

Several executives whom I spoke to for this column raised concerns about the polarizing rhetoric in the run-up to the 2020 election.

They say that it will be up to consumers to decide which economic narrative to believe.

If they think things are heading south, the perception could be enough to tip the country into a recession.

“Self-fulfilling prophecies are a reality,” Mittman warned.

“Certainly there are clouds on the horizon. There always are. No economy goes straight up.”

But based on his clients and on the companies he deals with, Mittman said that the “conversations are about growth, not about preservation, and a defensive position.”


Biena Snacks is on track to nearly double its revenue in 2019, according to founder and CEO Poorvi Patodia. The Boston company’s line of healthy snacks — which sell for nearly $4 for a 3.2-ounce bag — is sold in about 15,000 stores nationally, including Wegmans, Whole Foods, and Target.

Patodia said a growing number of people are having three or more snacks a day and are looking for nutritious options, such as Biena’s Chickpea Puffs.

“We are in the crosshairs of all these trends,” said Patodia who started her company in 2012 and has about 20 employees. Last week, the firm secured $8 million in venture funding to continue its expansion.

What does Patodia make of the economic jitters in some quarters? “I question it,” she said. “All the consumer indicators seem very strong . . . We’re not seeing any signs in my own business.”

Shirley Leung is a Globe columnist. She can be reached at shirley.leung@globe.com. Follow her on Twitter @leung.