ASHLAND — Higher interest rates usually serve as a damping agent on consumer spending, but they spell higher yields for investments.
That was the case on Thursday when Ashland County Treasurer Angie McQuillen approached commissioners to report a $576,709 return on county investments as the fourth quarter of 2022 drew to a close.
In 2021, the total returns on investments totaled $96,338.18. The bleak numbers prompted McQuillen to project only $150,000 in returns on investment heading into 2022.
The investment income from 2022 spelled a 486% increase from 2021 numbers, according to records from the treasurer’s office.
“That blowed my projections way out of the park,” said McQuillen.
The principal reason behind this, of course, is the fact the Federal Reserve hiked interest rates seven times in 2022 in an effort to curb inflation.
Interest rates for investments the county held in 2022 went anywhere from starting at 0.1% and going up to 3.44%. Federal notes went from 1.4% to 5.05%.
The hikes spelled good news for the county, but inflation across the country rose at a rate of 6.5%, according to the latest Consumer Price Index published by the U.S. Bureau of Labor Statistics. Inflation is slowing, but still a far cry from the Fed’s 2% target.
Another reason investments did so well, McQuillen said, is because the county had new money to invest, namely, its $10.4 million allocation of the American Rescue Plan Act.
McQuillen said her projections for this year sit at another modest estimation of $200,000.
“I think we’ll do better than that, but we also won’t have as many new dollars out there to invest. All the ARPA money we received the last two years, that really helped with the bottom line — that was all earning interest,” she said.
Earnings on investments are transferred to the county’s general fund.
McQuillen’s report to the commissioners came during the Ashland County Investment Advisory meeting. The committee is made up of the treasurer and two commissioners and is held quarterly during a scheduled commissioners’ meeting.
