Economy Here Remains Steady

Retailers and Bankers on Island Report Slight Increases in Sales
Over Last Summer; Forecast for Autumn Very Strong

By JACK SHEA

Business is here and more is coming.

Island merchants overall report they are up six to 12 per cent over
last year at this point in the season and visitor indicators for August
and beyond are strong, most business owners say.

While inflation and price increases may inflate real growth,
merchants say they are generally buoyed by June and strong July Fourth
business - and particularly by future bookings for August and
early fall.

Steamship Authority bookings year to date are up two per cent
through June for passengers and flat for automobiles, according to
information provided by Vineyard SSA governor Marc Hanover. The boat
line increase is small but includes May and June bookings which were
below a year ago. According to the Martha's Vineyard Chamber of
Commerce, Cape Air business is up eight per cent this year.

Real estate continues to struggle with double-digit declines in
sales and mortgage activity. Rental vacancies are high right now even as
hoteliers report strong bookings going forward. But early bad news in
wedding bookings has turned dramatically. An informal survey of 45
hospitality venues by the chamber of commerce indicate that most places
are virtually booked from August through October, according to Nancy
Gardella, chamber executive director.

Maggie White, realtor, innkeeper and president of the Edgartown
board of trade agrees. "My bookings are terrific right now and
going forward," she said, adding that she senses a new surge of
energy in Edgartown and among her confreres in the business community
this year, particularly among gallery owners.

Vineyard business owners generally hold their breath as the summer
approaches. Most speak conservatively about their business prospects
until the post-Labor Day tally. But optimism reared its head often in
interviews this week and support for ideas such as expanding the
shoulder season drew interest.

Most commonly-watched indices are positive. Commercial checking
deposits are even to up eight to nine per cent at area banks. Chris
Wells, executive vice president at Dukes County Savings Bank, Paul
Watts, executive vice president of Bank of Martha's Vineyard and
Fielding Cooper, chief executive officer of Edgartown National bank, all
provided overviews of the business climate.

"Last year may have been the bottom," Mr. Wells said,
adding: "Our sense is that business is even now. Business checking
account deposits are even with last year [in all categories], though
they spiked after a very strong July Fourth period. Deposits are down
about one per cent so far in July." He said this reflects a small
post-July Fourth slump. Mr. Wells said real estate sales in the middle
range ($750,000 to $1.5 million) are under pressure. "We're
getting financing requests for $1 million and above rather than $500,000
and under, he said.

Mr. Watts painted a similar picture. "In the hospitality
business nobody is having a great year but they are consistently ahead
of last year," he said, adding: "It's an okay year and
okay is good. June was a banner month and July is slightly
softer." He noted that Vineyard traffic is weather dependent and
what he called "Boston TV weather report dependent." He also
said:

"Retail is up, down and all over the board. Those with a
handle on things are doing okay." Asked what constitutes a good
handle, Mr. Watts replied: "Changing inventory, even if
they're just changing displays and moving stock around and having
enough staff. People who work their business get rewarded and
that's especially true on the Vineyard."

He also said building and construction remains strong and while real
estate is not, "the pipeline is filling nicely for the third
quarter. People may be holding out as prices decline. They may be
negotiating longer."

Mr. Moore also pointed to hopeful signs. "Restaurant and
retail business seems to be up. The weather has been good, We look
closely at overall deposits as a barometer. While large depositors can
skew the numbers, June 2006 to June 2007 looks to be up eight to nine
per cent," he said, adding: "But of course last year was
down."

Island retailers who have been successful over time feel good about
2007. Tim Dobel, co-owner of Mocha Mott's, said: "Oak Bluffs
is busier than last year, Vineyard Haven is down a little -
there's no parking anymore. They could not have made a bigger
botch in rehabbing the parking lot by Stop & Shop. First, it was the
Main street rehab which hurt, then the Stop & Shop rehab.
We're down 125-20 spaces." He credited good weather and his
brand marketing efforts including, marketing more hats and shirts and
some ecologically-aware moves, including offering CO2-free Peruvian
coffee and pouring into corn-based cups, rather than oil-based plastic.

Mr. Dobel is also a fan of developing a longer shoulder season.
"Peak times pay the bills. You make your money during shoulder
periods," he said, noting that the periods vary by Island town. In
Oak Bluffs the season in May and June, while in Vineyard Haven it is
September and October, he said.

Being an institution is good too. At Murdick's Fudge, a
100-year-old business with roots in Mackinaw Island, Mich., June was
strong, July Fourth "amazing," proprietor Mike McCourt said.
With stores in Michigan, where auto industry cuts has affected business,
Mr. McCourt offered a philosophical tip to retail colleagues who may be
struggling on the Vineyard:

"If anyone thinks we're struggling, go to Michigan.
You'll change your mind," he said.