Prosperity looms as issue of '90s if slowdown arrives

PHILIP MOELLER

November 14, 1990|By PHILIP MOELLER

If you are concerned about too much growth in your community, rest easy. What few pro-growth sentiments survived last week's local elections will almost surely be erased by a sickly regional economy.

Ironically, the backlash against growth -- seen strongly in county executive races in Baltimore County and Howard County and, earlier, in the Montgomery County primary -- may have peaked just as the economy was beginning what could be a prolonged slide.

Of course, much of the anti-growth sentiment is actually anti-tax sentiment. And, while lower growth does remove some pressure for higher spending on local roads, schools and other urban infrastructure needs, it doesn't translate into lower taxes.

On the contrary, economic slowdowns may actually lead to higher tax rates -- an enervating condition that all too accurately describes what's happened to the city of Baltimore. And the city seems destined to have lots in common with its neighboring counties.

Dr. Charles McMillion, who has been studying the Baltimore regional economy, says that growth in the region actually has been slipping for years -- in absolute terms and, more arguably, in relation to the broader Maryland and U.S. economies.

Dr. McMillion, a senior fellow at the Johns Hopkins University Institute for Policy Studies, is not making any specific forecast about the region's economic performance over the coming year. But he does agree with anecdotal evidence that activity is declining -- perhaps at an accelerating rate.

Looking at national growth rates over the past four decades, there's no doubt at all that the U.S. economy has been slowing markedly. Here is the average annual growth rate of the U.S. economy during the last four decades (these are so-called "real" growth rates, adjusted to eliminate the effects of inflation):

1950s: 4.04 percent.

1960s: 3.97 percent.

1970s: 2.8 percent.

1980s: 2.67 percent.

There is nothing in Dr. McMillion's crystal ball (or that of most long-term economic forecasters) that would suggest anything but a continued decline in growth during the 1990s. We're hardly off to a rousing start in 1990, and this year looks downright inviting when compared with forecasts for 1991.

Historically, Maryland's economic growth has paralleled national activity, although the state has gone through periods of both underperforming and outperforming U.S. averages. The good news is that we're in one of those outperforming periods today.

The bad news is that some forecasters feel Maryland's relatively heavy reliance on defense industries and government services may become a future weakness, rather than the source of stability it's been in recent years.

Worse, the growth trends in the Baltimore metropolitan area have been even less favorable during the past 20 years. According to numbers pulled together by Dr. McMillion, here is the estimated percentage change in population for the U.S., Maryland and metropolitan Baltimore from 1970 to 1990.

United States: 22.5 percent.

Maryland: 19 percent.

Metro Baltimore: 12.8 percent.

This relative disparity in population change has been accompanied by a much more dramatic spread in employment growth during the same period:

United States: 55.2 percent.

Maryland: 52.8 percent.

Metro Baltimore: 36.2 percent.

These figures dampen both Maryland's claim as a boom economy compared with the nation (it's not) and metropolitan Baltimore's self-image as a high-growth area. Using employment growth as a measure of a region's overall prosperity is hardly a precise measure.

But good figures on local-area economies are hard to come by, and it's not unusual to use employment as a proxy for overall economic activity.

Although the metropolitan area is not a high-growth area, that's not the same as saying that parts of the region have not experienced dramatic growth. Dr. McMillion, researchers at the Baltimore Regional Council of Governments and other experts have identified the unevenness of growth in the region as one of greater Baltimore's biggest problems.

Breaking out the 20-year growth records of population and employment for the metropolitan area provides striking contrasts. First, the population changes:

Baltimore: 18 percent.

Anne Arundel: +44 percent.

Baltimore County: +11 percent.

Carroll: +75 percent

Harford: +45 percent.

Howard: +185 percent.

Now, the employment changes from 1970 to 1990:

Baltimore: 4 percent.

Anne Arundel: +81 percent.

Baltimore County: +69 percent.

Carroll: +74 percent

Harford: +46 percent.

Howard: +324 percent.

Given intercounty commuting patterns, it would be silly to read too much into county-by-county statistics. But it's clear there are some incredible differences within the Balti

more region, including some that make last week's election results clearer.

Good numbers on current levels of economic activity around the state

are hard to find. Unemployment rates are up only slightly and hardly suggest a collapse. Weekly claims for unemployment benefits in Maryland -- another good measure of what's going on in the economy -- do suggest a weakening economy.

An analysis of weekly claims shows that first-time claims for jobless benefits started to rise over earlier-year levels in late spring and that the gap has continued to grow. Total claims for benefits, including new claims and all continuing claims, have been running 40 percent above year-ago levels in recent weeks.

Clearly, the region is not as healthy as many people think. And, if a slowdown does arrive as advertised, it will be prosperity, and not growth, that emerges as the economic issue of the 1990s.

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