Pointing to economic indicators that suggest Maryland's recession is finally hitting bottom, Mark L. Wasserman, state secretary of economic and employment development, says the key to recovery now is consumer spending.
"I would say to the Maryland consumer, look on the bright side. There's a lot right about the economy," Wasserman said.
In an annual assessment of the state's economy, delivered yesterday, the Department of Economic and Employment Development found Maryland to be in better shape than other states and poised to turn up when the recovery begins.
But Wasserman also said this recession is "very different" than past downturns because of the huge amount of federal debt See preventing the government from spurring the economy with spending programs. As a result, he expects the recovery to be slow and gradual.
The lack of consumer confidence was reflected in an $11 million drop in retail sales during the first nine months of the year along with a reported decline during the crucial Christmas season. But Wasserman said Maryland consumers are economically better off compared with the rest of the nation and should be willing to be spend.
Maryland's median income remains higher than the national average, and the total state employment increased by 3.3 percent during the first 10 months of the year. Between January and October of 1991, the unemployment rate dropped 0.6 percent, to 5.5 percent.
Maryland's above-average performance was also shown in a quarterly survey released yesterday by Grant Thornton, a Chicago-based accounting and consulting firm.
The Grant Thornton Index, a composite of seven equally weightedeconomic indicators, declined by 0.3 points in the Baltimore metropolitan area during the third quarter compared with an average decline of 0.49 percent for 24 metropolitan areas. For the 12 months ending Sept. 30, the index for Baltimore dropped 1.49 points compared with an average drop of 1.52 for the 24 surveyed areas.
While the Baltimore area was above average for Grant Thornton, the Washington metropolitan area was on the low side, however. The index for Washington dropped 1.40 points in the third quarter and 2.59 points for the 12 months ending Sept. 30.
The index includes factory hours, nonfarm employment, construction permits, retail sales, business starts, business failures and money supply.
"Consumers should remember the growth of Maryland's underlying strengths," said Jane Howard, a spokeswoman for the DEED, referring to Maryland's technology and health service industry. Health service jobs increased by 73 percent from 1980 through 1991, hitting 164,700.
Maryland's transportation sector, which has traditionally been seen as an underlying strength, has declined, following the national trend. But Wasserman pointed to tourism and exports as possible strengths in the future. He said tourism generates $6.3 billion in the state annually and state exports to Europe are up 41 percent.
Furthermore, high profile events such as the two Olympic trials and the opening of Oriole Park are expected to increase tourism revenue.
Despite DEED's position, Ann Franklin, an economist with the General Assembly, said overall economic and employment growth are misleading indicators of a consumer's ability to spend.
"Many employed people have experienced a cut in bonuses or wage freezes," said Franklin.
"They have read about the widespread layoffs . . . and they are going to want to be cautious spenders."