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Drive To Recovery: Peter Lynch and Cathy Minehan

Special Program

On February 19, 2009, The Commonwealth Institute was pleased to host the sold-out “Drive To Recovery” featuring Peter Lynch and Cathy Minehan.  Over 100 business owners and executives came together for this special breakfast forum to hear about the challenges in the economy from two of the area’s most prominent financial experts.

 

Cathy Minehan, the former President and CEO of the Boston Federal Reserve, provided a snapshot of today’s economy and offered insight into what we should expect over the next year.  Minehan commented that 2009 continues to be very difficult with unemployment over 7% and increasing underemployment.  Consumer confidence is at a new low as people need jobs before spending money.  On the bright side, there are some indicators that 2010 will see a change for the better.  The U.S. credit market does show signs of easing, particularly with the Fed expanding its balance sheet.

 

Peter Lynch, Vice Chairman of Fidelity Management & Research Company, gave an enlightening comparison of the Great Depression and today’s recession.  Ultimately, it’s difficult to equate the challenges of the 1930s with today’s issues.  That does not diminish the gravity of this current recession but rather illustrates the unique challenges we deal with in a modern economy.  One notable difference is that the FDIC (Federal Deposit Insurance Corporation) did not exist in the early 1930s where one out of ten people lost money in the banks.

 

Minehan and Lynch both acknowledged that lack of savings and excess spending over the past 10-15 years have played major roles in this recession.  We can all blame various people and institutions for this mess but we must look at ourselves too. It’s no surprise that people are now hunkering down in the face of inhospitable markets. 

 

The critical message that both Minehan and Lynch conveyed to the audience was the importance of small businesses.  These companies are the backbone of the U.S. economy and there needs to be a way in which small businesses can get more money having been overlooked in the current stimulus plan.  It’s interesting that all of the companies that have been flailing and failing are the major financial institutions and not the large companies that have roots in the small business community.  Both presenters, along with moderator Grace Fey, encouraged business owners to stay optimistic and to keep an active network of colleagues and clients.

 

Words of Wisdom:  The people who do the most work now will be the ones who are rewarded when things turn around…which they will.