Fed needs to be careful about impact on small businesses

Regional economic indicators point to a moderate local economy:

* The unemployment rate in the Dayton area is currently 4%;

* In early fall, the number of homes sold in the region fell 2.5% compared to 2021;

* Regional business tax collection increased by 4.16% compared with previous years.

Small businesses are persevering in the Dayton area, but we must be careful not to corner them.

The Fed hasn’t raised interest rates by 4.25% in one year since the 1980s. In the early 1980s, inflation was over 10% and interest rates skyrocketed. In 1981, Congress removed interest rate caps, removing the 18 percent cap on business loans and the 12 percent cap on personal loans.

The sharp rise in interest rates has sent personal mortgage rates climbing above 18%. That kind of economy is not conducive to economic growth. If borrowing money becomes more expensive, home sales, car sales and business borrowing will all be affected.

Covid-19 has had a roller coaster of impact on these industries and now is not the time to continue the roller coaster; we need stability and certainty. Supporting our local auto dealerships, holiday shopping and home buying boosts business growth and will move our economy forward.

Federal economists need to pay close attention to past history, but also understand that none of us have navigated the post-pandemic economy, nor have the playbook for the game. Be careful, this is uncharted territory and overcorrection can have serious consequences.

Chris Kershner is CEO and President of the Dayton Area Chamber of Commerce.

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