Md.'s economy wilting but faring better than nation's

January 03, 1991|By David Conn

In Chinese, the word "crisis" includes the characters for "danger" and "opportunity," and Marylanders can look forward to a bit of both during the mild economic crisis the state is enduring, a report on Maryland's economy indicates.

That assessment came from J. Randall Evans, secretary of economic and employment development, who presented his third annual report on the Maryland economy yesterday, after a year in which most agreed the state and the nation had entered their first recession since 1982.

"For the past several years we've been able to report that the Maryland economy was growing at a strong rate," he told reporters and county economic-development officials. "The message here today is that the Maryland economy has been doing better than the national economy." But "obviously we're going through uncertain times."

The uncertainty also was reflected in an assessment of the Baltimore and Washington economies released yesterday by the accounting and management consulting firm Grant Thornton. The Grant Thornton Index, which comprises seven economic indicators, indicated that both cities' economies declined in the third quarter of 1990 and in the 12 months ending in September.

Maryland is better situated to rebound quickly from a downturn because of the strengths of its economy, Mr. Evans said, including its transportation, highly trained work force, proximity to the federal government and strong service sectors.

DRI/McGraw Hill of Lexington, Mass., predicts that in the first quarter of this year, employment and personal income in Maryland will emerge from a late-1990 trough and that disposable income will follow in the second quarter.

But, like growing numbers of national economic observers, including President Bush, Mr. Evans was willing to use the "R-word" yesterday, but with some hedging. "I think there are areas of the Maryland economy that are in a recession. But I think the figures indicate that we are experiencing modest growth" overall.

The slowdown, marked by declining retail sales taxes, rising unemployment and lackluster construction and manufacturing, has contributed to a projected budget shortfall of almost $425 million.

But it also presents opportunities, Mr. Evans said, especially if Maryland businesses can take advantage of international trade possibilities in the Far East, a unified market in Europe, and free-trade negotiations and agreements with Canada, Mexico and South American nations.

"Maryland and the United States must be poised to capture the opportunities these and other changes provide," he said in a report. He also offered six New Year's resolutions for Maryland businesses -- from a commitment to quality and work-force training to using new technology and reducing corporate debt -- that he said would enable them to compete locally and abroad.

He said businesses will need to be more self-reliant because the recent state budget cuts have left his department less able to support businesses and local governments seeking to foster business expansion.

The economic report indicates growth in most areas of the state's economy through 1989, but more recent data indicate declines.

Those figures are in line with the Grant Thornton Index. That index, which tracks the economies of 24 cities, shows a decline of 0.23 in the Baltimore metropolitan area's index, to 109.1, for the quarter that ended in September. That decline was less than the 0.39-point average drop for all 24 cities, and it left Baltimore's index just above the average of 109.0. The base for the index is 100 in January 1985.

But for the 12 months that ended in September, Baltimore's index fell 1.13 points while the 24-city average rose 0.06 points.

The Washington index fell to 109.9 in the third quarter, a 0.90-point drop. For the 12 months that ended in September, the capital's index fell 0.98 points, mostly because of sharply declining construction and retail activity, said Morton D. Goldman, manager of Grant Thornton's Baltimore office. He said Baltimore's declines resulted from weakness in construction permits and a decline in the nation's money supply. The index includes factory hours, non-farm employment, construction permits, retail sales, business starts, business failures and the money supply.

According to Mr. Evans' data, there were bright spots last year in Maryland's employment market. The civilian labor force increased by 21,147 people from October 1989 to October 1990, an 0.8 percent increase. And service sector employment was up, led by health services.

But manufacturing employment was down 2.5 percent in the year ending October 1990, and total employment rose by only 0.4 percent, or 10,479 people. Those numbers add up to a higher unemployment rate than October 1989 -- 4.5 percent vs. 3.6 percent -- but a level still below the national jobless rate of 5.4 percent in October 1990.

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