Business values are getting a boost from low interest rates

August 30, 2013 - Grand Rapids Business Journal

John Kerschen, Managing Director, The Charter Group, discusses the area economy in his most recent article in the Grand Rapids Business Journal. According to Kerschen, "Today’s near-record low interest rates have acted to boost business values much in the same way low mortgage rates have helped to restore residential real estate values. If a business owner were to consider that low interest rates are being held down by aggressive Federal Reserve Bank action, one could envision that rates will likely rise in coming months and years, leading to lower earnings, higher borrowing rates and eventually lower business values.

Despite almost daily newspaper headlines and television reports about how bad the economy is in Michigan, and now Detroit’s municipal bankruptcy, the state’s economy is doing fairly well. Comerica Bank’s Michigan Economic Activity Index is 74 percent above its low point during the Great Recession. The U.S. economy continues to grow at a projected 2 percent rate for 2013, and the S&P 500 stock index hit an all-time high in July. These may not be the heydays of 2004 to 2007, but it is a pretty good time for many businesses." more

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