It was beginning to look like such a promising decade. The end of corporate and personal greed. A thousand points of light. Freedom in the East. Continued prosperity.
To George Carbonell, things were looking particularly fine. For years he had been the top producer in the real estate department of Marriott Corp.'s Fairfield Inns division, making a very comfortable living.
But 1990 has brought to the Baltimore-Washington region what the Northeast and other areas have been suffering for the last few years: the start of an economic downturn that many are willing to call a recession, even if the technical numbers don't justify it.
And this slowdown is hitting people in this state who never felt it before: people much higher on the income scale, people who wear white collars to work. That's because there are so many more of them working in Maryland's economy than during the last recession, which ended in late 1982. And it's because a decade of borrowing and speculation has hit the financial, real estate and service industries harder than ever before.
At the same time, blue-collar areas such as manufacturing appear to be in a better position to weather a downturn. They've learned some lessons from the drubbing they took a decade ago, according to industry analysts, and already have downsized and toughened up.
The problem for Maryland is that those areas, now the best equipped to handle a recession, represent a much smaller proportion of the state's economy. Financial and service industries, meanwhile, became much larger pieces of the pie.
For Marriott, which builds and operates hotels and residential communities in all 50 states and 26 countries, the '80s were a gold rush. In 1982 the company employed 109,000 people; now it employs 230,000, about 6 percent in Maryland. But the real estate market has taken a sharp enough decline to warrant layoffs, more than 110 in all at Marriott headquarters in Bethesda. Many of the layoffs hit areas, such as real estate and architecture, that people like George Carbonell hadn't had to worry about until now.
He got his pink slip last month. Marriott will pay his salary until April, but at 35, Mr. Carbonell has two children, a wife who has no outside job, a Gaithersburg mortgage to pay each month and very little money saved up.
With a solid record in the real estate business, as well as restaurant management and accounting experience, Mr. Carbonell isn't very worried -- "I still have a pretty high confidence level that I'll find something," he said -- and despite the layoff, he's not bitter toward Marriott.
"If I was in charge, I'd probably be doing the same thing," he said. "There's times when you have to tighten the belt."
Those times clearly are here for many sectors of Maryland's economy. And some of them may find it a new experience.
"The thing that I see as different this time than last time . . . is really the housing market," said Lennie Zallar, vice president and treasurer of Hechinger Co. "If you look at the real estate values, they have not done well of late. I don't think that was necessarily
true the last time.
"Something that we look upon as being important in our line of business is housing turnover," he said. "And they're not turning over as fast as they used to do."
The recession at the beginning of the decade -- actually two recessions, one that bottomed out in July 1980 and the other that hit bottom in November 1982, according to economist Paul Boltz of T. Rowe Price Associates Inc. -- differed sharply from this downturn mainly in what caused it.
"The main thing that separates now from then is that [in 1980] the Federal Reserve [Board] was fighting the big battle against inflation and pushing interest rates up, basically causing the recession," Mr. Boltz said. "Now they're easing rates.
In fact, inflation as measured by the Consumer Price Index hit its peak at 13.5 percent in 1980. The prime rate, the interest rate banks charge their best customers, was about 9 percent in 1978; it shot up to almost 19 percent three years later. Meanwhile, inflation dropped to 10.3 percent in 1981 and then to 6.2 percent the next year. After reaching a low of 1.9 percent in 1986 it started heading up again, and if the rate of CPI growth in August and September were to hold for the full 12 months, inflation would reach 9.6 percent this year.
Some argue that even if the National Bureau of Economic Research officially declares a recession, a move that requires two quarters of GNP decline, among other factors, this one will be different from its predecessors. Although the 1980s saw the longest peacetime expansion on record, various industries and regions suffered their own mini-recessions. It's what economists call a rolling recession.
"I think we've been escaping recessions on a technicality for some time," said Dr. Anthony Carnevale, chief economist for the American Society for Training and Development. "There's been significant growth in some areas to paper over the recessions in other areas."