7% rise in income forecast

March 31, 1995|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

Personal income in Maryland will grow nearly 7 percent this year, solidly better than the national average, according to a forecast released yesterday by the University of Baltimore's Regional Economic Studies Program.

Program director Michael A. Conte said the gains will be pushed by a recovery in interest income and gains in corporate profits that are rebounding from an early 1990s battering, as well as 5.1 percent growth in wages. Inflation in metropolitan Baltimore is projected to be at or near 1994's rate of 2.5 percent, marginally below 2.6 percent inflation nationwide.

Mr. Conte said the projected gains follow a 5.4 percent increase in personal income in 1994, a year in which the state economy grew modestly. He said last year's gains and the projected 1995 boost, which would outpace the 5.6 percent growth projected nationally this year, are impressive considering that Maryland is especially hard-hit by deflationary forces like government budget cuts and layoffs, higher interest rates and defense conversion.

"We're weathering a tremendous storm, and people should be really proud of the job we're doing," Mr. Conte said. "In spite of all that, Maryland is adding employment. It's nothing short of phenomenal."

Maryland's per capita personal income was $25,347 last year, according to the program. Driving 1995's boost in incomes will be employment gains the report called "moderate." They said the state economy will add about 31,000 jobs this year, a 1.5 percent gain that falls short of the 2.5 percent national job growth forecast by other economists.

Almost 95 percent of Maryland's new jobs will come in services (22,200 projected new jobs) retail and wholesale trade (5,400 new jobs) and construction, the forecast predicts. The state's manufacturing job base continues to shrink, but more slowly than in recent years, Mr. Conte said.

Mr. Conte said the expanding service sector, contrary to popular belief, includes far more than just low-paying, low-skill jobs.

"The largest sector in services that is growing is nonhospital health services; I don't know anyone who flips burgers in a doctor's office," Mr. Conte said. "We're not replacing people who were running around in white lab coats, but many of these are good solid jobs that carry health insurance and other benefits."

Mr. Conte said he expects the state unemployment rate to fall by about 0.2 percent this year, as the job gains are partly offset by population growth and the return to the labor force of workers who had previously given up on finding work.

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