Congress and the White House finalized their deal to raise the debt ceiling Tuesday. But the president’s signature didn’t exactly boost the stock market. The Dow Jones Industrial Average fell more than 2 percent, amid other disappointing economic news.
Boston-area companies are still grappling to put all of the economic news in perspective.
Getting Past The Debt Standoff
Putting the long, drawn-out debt ceiling debate to rest comes at a good time for Organogenesis Inc. That’s because the Canton biotech company is holding its annual sales meeting right now in New Orleans.
CEO Geoff MacKay says the economy, and the consumer’s ability to pay for health care, is a big topic at the meeting.
"Because right now, we’re even concerned we have patients that can’t afford to even drive to the clinic," MacKay said.
Then, of course, patients have to pay the co-pay.
MacKay is encouraged by the debt ceiling deal. It’s not perfect, he says. Still, he thinks it’s good for the economy to get more stability.
"What we’ve achieved now is to get this out of the headlines, and also to have our ratings agencies send us an all-clear signal that our AAA rating will remain intact," MacKay said.
That’s important for his industry. Biotech research is costly to finance. Keeping interest rates down helps his company grow and bring on more workers.
"We’ve just hired our 500th employee last month, so we’ve been on a pretty good trend," MacKay said.
A trend he hopes the deal in Washington will help along.
Deal Finalized, Uncertainty Remains
Not all businesses see the Washington compromise in a positive light.
Scott Martineau is the head of business development at Active Shock LLC. The Manchester, N.H., firm makes suspension systems for armored vehicles. He says it’s obviously not great for his company that the debt ceiling deal cuts hundreds of billions of dollars in military spending over 10 years.
But Martineau says what’s even worse is that because of this huge, long debate, Congress is going home now without passing a defense budget.
"There’s just going to be this sort of churning effect within the military, with a lot of people running around shrugging their shoulders trying to decide what they can fund and what they can’t fund," Martineau said.
That’s not exactly the certainty his company’s looking for. If they don’t know what’s going to get built, they can’t design anything for that. Active Shock has grown from 10 to 30 employees over the last year. Now, Martineau has to figure out where to go from here.
"It could mean a shift in focus," Martineau said. "It could mean maybe a shift away from defense programs to looking at commercial applications for our product. It could just mean that we don’t expand like we’d like to."
The federal spending cuts in the debt ceiling agreement also rub David Parker the wrong way. He's the CEO of DigitalAdvisor LLC, an eight-person startup in Cambridge.
"That’s less money for the economy, so that’s just going to keep everything going downward," Parker said.
One of the company’s services is online reviews of digital cameras. Business has been bad. People haven’t been buying.
Parker thinks by cutting its own spending, the federal government is only telling consumers to pull in their horns even more.
"Ironically, it might affect business on the positive side," Parker said.
That’s because DigitalAdvisor also runs a coupon business. And the worse the economy gets, the more people will be looking to save.
This program aired on August 3, 2011.