THE ECONOMY - For some, the rainy day is already here

Patriot Ledger, The (Quincy, MA) - Monday, January 28, 2008

By ADAM RIGLIAN, The Patriot Ledger

Plasterer Charles Bashtway remembers the days when he had plenty of work, but that was before the economy sputtered, drying up business and giving him an unpaid vacation.

‘‘I’m dead. I’m not doing anything right now,’’ said Bashtway, 65, of Dedham, who works throughout the South Shore. ‘‘I used to make pretty good money. Now I have to worry about a rainy day.’’

Bashtway’s worries are growing because of predictions about the economy falling into recession.

‘‘(The) stock market’s lousy, everything is lousy. I was trying to sell my house, and I can’t even do that now,’’ he said.

In an attempt to stave off recession, the Federal Reserve has been aggressively cutting a key short-term rate in recent months and is expected to do so again at the end of a two-day meeting that begins Tuesday. The federal funds rate has been lowered from 5.25 percent to 3.50 percent since August, and some expect the Fed to set the rate at 3 percent Wednesday.

The federal funds rate is the interest rate at which banks lend money they have at the Federal Reserve to other banks overnight.

Dan Heitzman of Marshfield, founder and president of Stonebridge Financial Consultants in Rockland, believes recession is a ‘‘strong possibility.’’

‘‘My greatest concern is that the consumer stops spending,’’ he said.

In addition to the Fed’s interest rate cuts, Congress is working on an economic stimulus package that includes tax rebates and business incentives.

But Heitzman believes the stimulus package won’t be enough to avoid recession.

‘‘I think it’s going to be like putting your finger in the dike,’’ he said. ‘‘Every day we go to the gas pump and we pay our heating bills. That’s a pretty good reminder of how much is coming out of our pocket.’’

Heitzman said the best way to deal with an economic slowdown is to pay down debt and invest.

‘‘My advice is to pare down debt with the (tax rebate) money that comes back,’’ he said.

He also said this is a great time to invest in the stock market. The Dow Jones opened today at 12,027.17, down from 13,056.72 on Jan. 3.

Heitzman recommends funding retirement plans and investing in large-capitalization growth funds. He said that this is ‘‘not a time to be panicking.’’

As for the end of this downturn, Heitzman has a simple way to tell when it’s over:

‘‘We’ll know it’s over when we start thinking about going to the movies or going on vacation. Then it’s over.’’

According to some real estate brokers, the lower interest rates are helping the ailing housing market.

‘‘The interest rates coming down get the people on the fence (to look),’’ said Janice Richmond of Century 21 Network Richmond Associates in Quincy. ‘‘First-time buyers are deciding that ‘this is it,’ or close to it.’’

Low mortgage rates and a backlog of housing inventory have made this a good time to buy, said Rick Murray, a broker for Braintree-based Keller Williams Realty.

‘‘Anyone out there that is seriously looking has low-interest rates and plenty of choices,’’ he said.

Adam Riglian may be reached at ariglian@ledger.com .