Area economy slipped in late '91, study finds

March 26, 1992|By Ross Hetrick | Ross Hetrick,Staff Writer

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 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, said 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 is normally an indicator of future economic trends, said John Koegell, a spokesman for Grant Thornton in New York.

However, Baltimore is not heavily dependent on manufacturing, he said.

Of all 24 cities regularly surveyed by the firm, a negative trend was found in 9 cities in the fourth quarter;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.

Of the cities surveyed, Baltimore ranked 16th in the fourth quarter.

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