Economy strong, but doubts linger

January 08, 1995|By Shirley Leung | Shirley Leung,Sun Staff Writer

Retail sales and hotel occupancy rates were up in 1994. Unemployment went down, and Baltimore-Washington International Airport became one of the fastest-growing transportation hubs in the country. A pretty good year, Anne Arundel County business leaders said.

But a new Congress and the Federal Reserve Board's tendency to increase interest rates to hold down inflation makes it hard to predict whether those trends will continue.

"People are feeling more confident, but they're still being cautious," said Jeanette D. Wessel, executive director of the Anne Arundel Trade Council.

Statewide, retail sales were up about 5 percent from 1993's $40 billion and are expected to continue growing at that rate. Many Anne Arundel merchants say they expect to do better.

"The only question is the impact of the rebricking on merchants in Annapolis," said Thomas Saquella, president of the Maryland Retail Merchants Association, which is based in Annapolis.

A yearlong project to widen sidewalks, bury power lines and

lay new bricks on Main Street is to begin in March. Some Annapolis merchants have predicted they will lose as much as half of their business during construction.

Last year, the commercial vacancy rate in the business corridor around BWI dropped to 14 percent from 17 percent in 1993. Commercial space larger than 50,000 square feet is hard to find.

With airlines attracting more travelers by offering discount fares and with Southwest Airlines, a low-fare, no-frills carrier, opening more gates at BWI, occupancy rates at the hotels around the airport increased 3 percent last year, said Sandy Landstrom, general manager of the BWI Marriott Hotel.

Throughout the county, revenues from hotel room taxes rose 3.8 percent, according to the county Office of Budget and Finance.

And hopes for the new year are high in the hospitality industry.

"Hopefully, baseball will be back in town," said Ms. Landstrom. "We're looking to maintain or do better than 1994."

The opening this year of Route 100 from Interstate 97 in Anne Arundel County to I-95 in Howard County is expected to generate more revenue.

The new road will "revolutionize our economic competition, especially with businesses that need to be closer to I-95," said Michael S. Lofton, executive vice president of the Anne Arundel Economic Development Corp.

At the same time, the Federal Reserve Board's six interest-rate increases since last February cause some concern for businesses.

"The big cloud is still hanging over this part of the country, and that's interest rates," said Neil Shpritz, executive director of the BWI Business Partnership. "The Federal Reserve has moved too quickly. The cost of borrowing has really gone up, and there are fears that this has slowed the economy at the point of a recovery when the economy is still fragile."

The high interest rates made the county's residential real estate market the big loser in 1994. Home sales were 6 percent lower than in 1993, with 10,838 homes sold through November, but picked up in December as buyers adjusted to the new interest rates, said Patricia Savani, president of the Anne Arundel County Association of Realtors.

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