The economies of both Baltimore and Washington deteriorated in the last three months of 1991, the second consecutive quarterly drop for both cities, according to the latest economic index prepared by Grant Thornton, an accounting firm.
Baltimore was hurt by a drop in factory hours and decreasing construction permits, according to Morton D. Goldman, managing partner for Grant Thornton's Baltimore office. The Baltimore index, which had been at 108.4 three months earlier and 109 at the end of 1990, dropped to 107.7 at the end of last year.
The index consists of seven equally weighted economic indicators -- factory hours, non-farm employment, construction permits, retail sales, business starts, business failures and money supply. The index's base rating of 100 is January 1985.
While many economists say a national recovery has begun, Maryland might have to wait until the third or fourth quarter this year, according to Professor Mahlon R. Straszheim, chairman of the Economics Department at the University of Maryland in College Park.
He expects the state economy to lag behind the rest of the country because of its dependence on service businesses, which have been particularly hard hit in the recession.
Factory hours, one measure of manufacturing activity, is normally a indicator of future economic trends, according to John Koegell, a spokesman for Grant Thornton in New York.
However, Baltimore is not heavily dependent on manufacturing, he said. "Baltimore has a pretty diversified economy."
Of all 24 cities regularly surveyed by the firm, a negative trend was found in 9 cities during the fourth quarter while 13 metropolitan areas improved.
The index for Washington had a smaller drop, sliding from 109 in the third quarter to 108.9 at year's end.
This was primarily caused by declining factory hours, Mr. Goldman said.
For the year, the Grant Thornton index dropped 1.5 in Washington. For the year, the index dropped in 16 of the 24 cities in the survey. The average for all 24 metropolitan areas in the index fell by 0.3 during the year.
Of the cities surveyed, Baltimore ranked 16th in the fourth quarter. Boston had the lowest score with an index of 101.7. Just ahead of Boston is New York with an index of 103.3 and Dallas with 105.2.
The city with the greatest improvement since 1985 was Cincinnati with a 114.4 index, followed by San Diego with a 112.8 and Milwaukee with 112.4.