WASHINGTON -- The recession still has a firm grip on Maryland, with businesses reporting low retail sales, little demand for consumer loans and sluggish manufacturing orders, the Federal Reserve reported yesterday.
But retailers, manufacturers, builders and bankers ignored the dour reports they gave to the Fed and said they were still optimistic about business over the next six months.
The assessment was included in the Fed's periodic review of the nation's economy.
Why the contradiction?
"My feeling is that the nature of a businessman is if he's not optimistic, he's going to have a hard time staying in business. It's not in his best interest to be pessimistic," said Jerry Wade, senior research economist for the research division of the state Department of Economic and Employment Development.
Wade said the Fed's review of the Maryland economy matches the state's. "It's quite consistent with what we're seeing," he said, adding that Maryland isn't any worse off than the rest of the Mid-Atlantic region.
Retail sales were down, and almost half of the retailers surveyed by the Fed said they did not believe the recession had bottomed out in their areas. Most hoped Christmas sales would match last year and said they would offer discounts for the first time this fall to move merchandise, the Fed said.
Manufacturers told the Fed a similar story. They reported excess capacity and no change in shipments and orders. "Manufacturers indicated that general business conditions had worsened, and many felt that their local areas were still in recession," the Fed report said.
Commercial construction stayed weak, building vacancy rates remained high and lenders and contractors told the Fed that "it would take years to absorb the existing vacant space."
The lag in construction projects is the state's biggest concern, Wade said.
He noted that there is some good news for Maryland. Factories are reporting declining inventories, which indicates that they may soon need to rehire workers, Wade said. "You're more likely to see increased production," he said, but added, "The downside is that companies are getting better and better at managing inventories and working with low levels of inventories" so they won't need as many workers as they once did, he said.
The Fed also reported that the Port of Baltimore saw more activity in October, and that exports were expected to increase faster than imports during the next six months.