Banking & Finance  March 31, 2023

Tayer: Chin Up, Boulder

What’s that I’m hearing? With the announcement of Silicon Valley Bank’s failure and the collapse of other similarly situated financial institutions, it sounds like some of my business colleagues are getting jittery. “Will more banks fail, taking our economy with them?” “Are consumers finally tightening their purse strings.” “Is a recession looming?” “Will this cold winter ever end?” 

Chin-up, Boulder! 

It’s my job to anxiously follow economic conditions . . . so you don’t have to. At the Boulder Chamber, with our Boulder Economic Council division in the lead, we’re consistently monitoring economic metrics, assessing industry needs and talking directly to business leaders to gauge the health of our economy and identify troubling trends that demand our attention. We do that work so you can focus on meeting your own business goals and, when necessary, we’re here to provide assistance. 

Of course, in these activities, we’re always competing against the latest headlines. News of SVB and other banks collapsing, as the most recent and alarming example, sent shock waves of concern through our community. Justifiably. A number of our local businesses, with a high concentration in technology development fields and startup entrepreneurs, had loans and deposits with SVB. Others among us were invested in those imploding financial institutions. 

Fortunately, to help protect against the very worst damage from these isolated bank failures, the federal government stepped-in with reassuring support. The Boulder Chamber also pulled our local financial institutions together and identified those with the capacity to provide both bridge support and credit lines. It was heartening to see, once again, our community’s collaborative and mutually supportive character in full bloom.

What has been most troubling, though, is unsubstantiated speculation that the troubles for SVB and a few other banks are an indication of wider economic fissures. This conjecture, left unchecked, is the type of talk that can lead to a cycle of poor decisions and self-fulfilling prophecies — like the panicked withdrawal of funds from banks and credit unions with otherwise comfortable balance sheets. Just as hurtful are stories from local business owners regarding the drop in spending and investment tightening by their corporate clients as they trim their sails against perceived recession risks.

I will never suggest that the Boulder Chamber holds the crystal ball for our economic future. True hits to our system can come from just about anywhere, domestic or international, and can surprise even the most prescient economist. Still, while vigilance in the face of risk is always appropriate, we must also defend against the tide of angst that is driven by what one economist — Christopher Thornberg from Beacon Economics — has characterized as “Miserabilism.” 

At its root, miserabilism is the tendency for news organizations and speculators to pounce on any indication of negative trends in the economy as a sign of future disaster. Name some of the most recent boogeymen: Rising inflation, a drop in consumer purchasing or higher interest rates. Yes, there are impacts to our economy from these ever-variable indices. 

But is the sky falling? With industries operating at extraordinary capacity heights, with unemployment still at the lowest seemingly possible levels and still strong consumer spending on services (as Thornberg offers, he wasn’t sure anyone had room in their garage for more stuff after our recent spending spree), this doesn’t have the look of a recessionary cycle. And with GDP still in the positive column, it isn’t.

Rather than recognize inflation — and associated rising salaries, particularly at the lower end of the wage scale — as the logical consequence of a cash-soaked, stimulus fueled ($5 trillion worth) environment, the purveyors of miserabilist predictions would have you believe it’s time to run for cover. Again, while vigilance in the face of financial risk is always appropriate, the risk of overly pessimistic tendencies can lead to miscalculations that might result in even more disastrous consequences (like the Federal Reserve’s seemingly reflexive move to stem inflation by significantly raising interest rates, which is partially to blame for SVB’s collapse).

Yes, there are very real challenges to our local economic vitality. Office vacancies, workforce constraints, a deficit in accessible housing and back-breaking property tax rates, to name a few. The Boulder Chamber is working to address each of these challenges and others that are more industry-specific. Still, look around. Most of our industry sectors are experiencing positive growth. Our local banks and credit unions are healthy. Many small businesses have enjoyed strong sales, as rising sales tax receipts indicate. Spring is coming . . . 

Chin-up, Boulder!

John Tayer is president and CEO of the Boulder Chamber of Commerce. He can be reached at 303-442-1044, ext 110 or [email protected].

John Tayer
John Tayer is president of the Boulder Chamber of Commerce.
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