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not much to do,” he adds. “They decided it Importantly, those forecasts came before
“ barbecue or sofa.”
Human ingenuity
points to long-term
growth. Yes, things may
slow down but there are
going to be very positive
tailwinds in the long term.
So long as your own
finances and balance
sheets are in order, it’s
not a bad time to be
thinking long-term.
creating even more economic uncertainty
was time to get a new deck or buy a new the Russian incursion into Ukraine,
as oil prices soar even higher. Add that to
The upshot of the stimulus was that global sanctions on a major country and
spending took off in the second half of Mateyo says it’s possible that economic
2020. But as spending increased, companies activity might slow.
were also struggling with pandemic labor
shortages and shutdowns, again attributable “The fog of war has made everyone’s crystal
to COVID. There were also shipping delays ball cloudy,” he notes.
and supply issues creating a significant
mismatch between supply and demand. So, what are business owners to do in
“That’s a classic economics 101 recipe for uncertain times? Mateyo says that in
inflation,” Mateyo says. general it’s time to be disciplined with
inventory. But beyond that, business
Despite the fact the inflationary pressures owners can also take a long-term view and
were building, the Federal Reserve opted to seek out opportunities. “You could look at
maintain stimulus into 2021. acquisitions, or other business lines you
might want to start,” he says. “But you need
“The idea is to take the punchbowl away to know that we’ll get through this. We have
from the party,” Mateyo explains. And the before. Business can still prosper. “Human
Federal Reserve plans to do just that with ingenuity points to long-term growth,” he
a series of interest rate hikes. “Interest rates continues. “Yes, things may slow down
increase the cost of money,” he continues. but there are very positive tailwinds that
“As the cost of money goes up people are take shape over the long term. So long as
likely to borrow less. And historically that’s your own finances and balance sheets are
served as a suppressant to growth.” in order, it’s not a bad time to be thinking
long-term.” n
On the surface, rate hikes would seem to be
a real barrier for middle market companies Looking for more insights?
that rely on financing to help consumers For more information regarding economic
buy goods. But Mateyo says that’s not perspectives readers can join a panel
necessarily so. For instance, supply chain moderated by Jeff Wenham, Head of
shortages have caused inventory issues for Liquidity and Portfolio Management at
car dealerships, some of which need to KeyBank for a live-streamed discussion on
place customers on waiting lists. And for April 21st at 11:00 a.m. PST. Visit key.com/
goods like furniture, the wait time for a new epwebinar to register.
sofa has increased significantly.
To learn more, contact Ryan Ames: 206-343-
“To some extent, demand might come 6852 or Ryan.M.Ames@key.com
down, but demand has been so extended
that it might be time to catch our breath Banking products and services are offered by
and see production catch up,” Mateyo KeyBank National Association. Any opinions,
notes. “We want to see some normalcy. It’s projections or recommendations contained
a tricky balancing act because inflation can herein are subject to change without notice
and are not intended as individual investment
tip over to into recession.” advice. This material is presented for
informational purposes only and should not
Finding balance is not easy. There’s a great be construed as individual tax or financial
deal of uncertainty on a tightrope, which is advice. KeyBank does not provide legal
why forecasts of what Federal Reserve rate advice. Investment products are: NOT FDIC
might look like vary wildly. At the end of INSURED* NOT BANK GUARANTEED*
2021, the prevailing thought was that there MAY LOSE VALUE * NOT A DEPOSIT*
NOT INSURED BY ANY STATE OR
would be two or three interest rate increases FEDERAL AGENCY
in 2022. But now, some analysts predict
anywhere from four to eight incremental ©2022 KeyCorp® All Rights Reserved.
rate hikes over the course of the year. KeyBank is Member FDIC. 220304-1491178
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