Despite rate cut, caution remains

Many bay area residents say they're still waiting for lower interest rates to pay off.

By DAVE GUSSOW

© St. Petersburg Times, published May 18, 2001

Interest rates are down and Wall Street is heading up, at least for now, but Main Street thinks it's too soon to celebrate the state of the economy.

"I'm more optimistic than before," said Patrick J. Raftery of Clearwater, a member of the St. Petersburg Times' Money Panel. "But I'm cautious relative to whether this will be a long-term upswing."

Raftery, 53, was the only one in an informal sampling of panel members Thursday who has been affected by the Federal Reserve's five interest rate cuts this year.

Raftery had only been thinking about buying a new house and selling his current one until the Fed's moves motivated him to get serious about the pursuit. If he finds the right one, Raftery thinks he'll have no problem selling his house, which he calls desirable and in a good location, because of lower mortgage rates that have adjusted in anticipation of Fed cuts.

But others said the rate cuts have not filtered down to them. Sandra Koerner, 33, of Hudson saw her family's portfolio take a substantial hit when the market dived, though she says the family hasn't changed its investment strategy.

"I'm pretty much pessimistic since stocks are going down so much right now," she said. "I still haven't seen a turnaround yet."

Sandra Davis, 36, of Tampa said the rate cuts haven't affected her day-to-day financial life, she has no investments and she worries about more dark days ahead.

"There's so much ups and downs," she said. "I think it's going to get worse before it gets better."

But the current downturn won't be as severe as those in the early 1970s and 1990s, says an optimistic Francis F. Sullivan, 64, of St. Petersburg.

"I know the economy went down a little bit," he said. "It's a cycle we go through every once in a while. We can't have a hot economy year in and year out."

Sullivan says he and his wife weathered the market's decline without dipping into their principal or changing their investment strategy. "I don't get jaded about these things," he said. "We roll with the punches."

And then there are those who are too busy with their own lives to keep up with Washington and Wall Street.

"I don't really pay attention to it," said Adrian Salgado, 21, of Tampa. "I pay attention to what I make."

- Dave Gussow can be contacted at gussow@sptimes.com or (727) 445-4228.

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