Forecasters predict Md. recovery soon


January 03, 1992|By David Conn

Maryland's chief economic development official yesterday declared the state's economy not half-empty but half-full, and getting fuller all the time.

"Matched up against what's been happening nationally, the Maryland economy continues to outperform the national economy," Mark L. Wasserman, secretary of the Department of Economic and Employment Development, said in DEED's annual economic state of the state address.

In a broad overview of what even he admitted was a bleak year, Mr. Wasserman struck as optimistic a tone as he could in calling for a return of consumer confidence in light of some promising economic indicators.

"By all measures, by all indicators there will be growth" this year, although probably not until after the winter ends, Mr. Wasserman told a group of reporters at the Legg Mason Building downtown. "Recovery from this recession will be slow . . . and gradual."

He pointed to two forecasts by independent economic consulting firms that predict slight growth in both employment and disposable income in the first quarter of this year in Maryland.

The WEFA Group, in Bala Cynwyd, Pa., called for 1.5 percent growth in both income and employment in the first quarter of this year, while DRI/McGraw Hill in Washington predicted a 0.5 percent employment increase and 0.7 percent growth in disposable income in the first quarter.

Recent forecasts from the University of Maryland, Baltimore Gas and Electric Co. and others have predicted a continuing recession until after the first quarter.

A turnaround will come eventually, of course, and Mr. Wasserman stressed that Maryland should be ready for it. "Not if, but when the nation's economy begins to climb out of this recession, the challenge is for Maryland to climb faster," he said.

Hampering that goal is the distinct nature of this recession, which has hit the financial services industries harder than past downturns. White-collar unemployment in Maryland tripled in 1990, and now is

one-quarter of the jobless rolls.

Coming at the end of a decade of higher debt, both consumer and corporate, the recession has hit the retail and construction industries particularly hard, Mr. Wasserman said. "The harsh reality is we have lost jobs in some very key areas," he said, including construction, manufacturing, professional services and the so-called FIRE sector: finance, insurance and real estate.

Other symptoms of Maryland's ill health through the last year include:

* The rate of business failures jumped to 52 per 10,000 companies in 1990 from 20 per 10,000 companies the year before, still well below the national rate of 75 per 10,000 companies in 1990.

RF * Retail sales for the first nine months of the year were flat com

pared with the same time in 1990, with a decline of less than 1 percent in sales through September. Early indications are that fourth-quarter sales will be no better, compared with 1990's.

* Building permits declined through October for both residential and non-residential construction, compared with the first 10 months of 1990.

But Mr. Wasserman pointed out that the economy remains strong at its foundation, and some indicators already have turned positive.

Although the jobless rate -- the percentage of the people out of work and looking for a job -- was higher in October than a year earlier, it had fallen 0.6 percentage points from the beginning of the year.

And the number of non-agricultural jobs, measured by a survey of employers, also showed growth since January.

Other bright spots were international trade through the Baltimore-Washington International Airport, which increased 33 percent in the first 10 months of last year, and activity at the port of Baltimore, where 5.2 percent more general cargo was handled during the first half of the year than the same time in 1990.

Mr. Wasserman urged consumers to adopt an attitude of "measured optimism."

"An educated guess is we've seen the bottom, and in a sputtering way we're beginning to see a rebound," he said.

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