The national economy remains at a standstill, and, after it restarts, probably will grow at a slower pace, according to an economist for IBM Corp.
"The bad news right now is the economy is pretty much dead in the water," said Brian P. O'Connor, director of economic research and forecasting for IBM. The economy is either posed to slip back into a recession, or "crawl its way forward," he said.
O'Connor's comments were made yesterday at the Greater Baltimore Business Outlook 1992, a seminar sponsored by the Greater Baltimore Committee, a group representing local businesses. Besides the general economy, other topics of
the seminar were banking, commercial real estate and health care.
O'Connor said he does not expect the economy to show much strength until the spring of 1992. He said the primary problem was sluggish consumer spending, which accounts for two-thirds of the nation's economy.
Consumer confidence is hurt by the lack of real income growth, growing unemployment and high debts accumulated during the 1980s, O'Connor said. "It is a consumer marketplace that is negatively grinding on itself," he said.
He said the possibility of a "double dip" recession, where the economy begins to move back down, is "rising rather rapidly."
Charles E. Boyd, general supervisor of forecasting for Baltimore Gas & Electric Co., had a somewhat more optimistic outlook, but was still gloomy on job growth in the Baltimore region. His forecasts were based on the responses of business professionals from six major Baltimore organizations: BG&E, MNC Financial Inc., C&P Telephone Co., Blue Cross and Blue Shield of Maryland, the University of Baltimore Center for Business and Economic Studies and W.C. Pinkard & Co.
The consensus was that the gross national product will decline by about 0.3 percent in 1991, but will grow by 2 percent next year. But the projected 1992 growth is well below the five-year average of 3.3 percent for the years 1984 through 1985.
While most of the respondents felt the economy started to move out of the recession during the summer, they did not expect Baltimore employment levels to return to pre-recession levels until late next year or early 1993, Boyd said. Two of the officials expected a double dip recession while four of them didn't.
Some of the biggest problems in the economy have been in the banking industry. In Maryland, MNC Financial Inc., the parent company of Maryland National Bank, has been hurt by commercial real estate loans.
"We made a few bad loans," said Frank P. Bramble Sr., MNC's president and chief executive officer. "About $1.8 billion by last count."
One of the results of the banking industry problems is that banks have to reject customers who had been considered credit worthy in the past. "Unfortunately bankers are not in the position to make the type of credit decisions that would help lead us out of this recession," he said.
But despite their problems, banks and savings and loans in the Baltimore region are generally stronger and have better earnings than do their counterparts in the rest of the country, Bramble said.
The local commercial real estate market is also in better shape than the rest of the country, according to Walter D. Pinkard Jr., president and chief executive officer of W.C. Pinkard & Co., a major Baltimore real estate firm.
Baltimore, which has a lower office vacancy rate than other parts of the country, has been hurt by the white-collar recession. However, government office needs have remained steady because of the attraction of Baltimore as a place to live, Pinkard said.
One area that has a good outlook, despite the recession, is health care.
Barbara B. Hill, president of Prudential Health Care Plan of the Mid-Atlantic, said the Baltimore region is in a favorable position to capitalize on the coming growth in biotechnology because of the large number of firms involved in that research.