Difference in Md.'s economy is clearer

ECONOMY WATCH

June 21, 1994|By John E. Woodruff | John E. Woodruff,Sun Staff Writer

For a decade and a half, Maryland has tended to think itself somehow "different" from the rest of the country.

At first, through most of the 1980s and especially during the recession that struck the rest of America early in the decade, being different seemed to be good news. The state won national attention for seeming to be "recession-proof" because of its many layers of federal spending, especially defense spending, which seemed fated to grow through fat years and lean.

Then, when the slow-motion national recession of the 1990s coincided with the collapse of communism and the end of the Cold War, Maryland's reliance on defense turned from blessing to curse. The state still felt it was "different," but suddenly the difference seemed to be that, with defense industries downsizing frantically to make up for plummeting defense budgets, recovery here lagged far behind the nation.

Now, with a U.S. recovery in full swing and Maryland's gradually gathering momentum, it is becoming clearer almost daily that the state is, more than it has been for many years, very much a part of the national economy -- and very much dependent on the national economy's vagaries.

Unlike past recessions, when Maryland officials were likely to have their eyes more on the federal budget, and the goodies that could spill out of it into this state, this time the issue most on local officials' minds is the same one preoccupying Wall Street and Main Street -- interest rates, and how they will affect inflation and the overall recovery.

And even as it slowly adjusts to the shrinkage in the defense cornucopia that once made for such easy feeding, the state's economy is gradually beginning to benefit from the strengthening national recovery.

Given what is going on in the national economy -- steady modest growth and relatively slow inflation suggesting that the growth may last for some years -- that may yet prove to be better news than it seemed only a few months ago.

"Job-finding should be easier this summer," Manpower Inc., the temporary employees supplier, said last week in its quarterly "Employment Outlook Survey."

The Manpower survey of employers' hiring intentions confirmed what several other recent surveys have suggested: Big elements of the traditional economic base -- manufacturing, construction and wholesale and retail trades -- are likely to continue their recent expansions well into the third quarter of the year, reviving more forcefully than seemed probable only last winter. All of those sectors are still important in Maryland.

Surveying 15,000 employers spread across 10 industrial sectors, Manpower found that 29 percent intended to hire additional employees and only 7 percent planned further cutbacks, a finding the firm described as "the most optimistic since the third quarter of 1989."

"The job growth that characterized the first six months will likely continue into the third quarter," the Manpower report concluded.

Most economists expect Maryland's recovery to go on being less robust than the nation's for at least the rest of this year.

But most of the likely damage from the defense cutbacks is already done. From here out Marylanders should feel more and more like participants in the national recovery.

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