Economic jitters surface

June 04, 1995|By Mark Guidera | Mark Guidera,Sun Staff Writer

Howard County has homes with sticker-shock prices, wage earners with big incomes and one of Maryland's highest percentages of residents with advanced degrees. But this high-end crowd also has a case of the jitters.

Although they are far from having to give up their relatively high quality of life in one of the nation's richest counties, Howard residents are evidencing worries about job security. And those worries could dampen one of Maryland's most robust economies.

"There's a general uneasiness out there about the economy," said Richard Story, executive director for the Howard County Economic Development Authority, which works to attract and retain businesses.

The uneasiness is reflected in county buying trends. County residents aren't spending money on big-ticket items like the new dream homes that can be custom-ordered in upscale River Hill, Columbia's newest community. But they are going off to The Mall in Columbia and area "category-killer stores" to snap up new clothes, furniture and trinkets at a healthy clip.

The reason for the unease, said Charles McMillion, a consultant, may be found 20 miles south in the nation's capital.

"If the Republicans have their way with cutting back the federal government, it is Democrats who will lose their jobs. And Democrats live in Columbia," said Mr. McMillion, who tracks the Maryland economy for MBG Information Services, a Washington, economic consultant.

Almost 40,000 Howard County residents commute to Washington each day for work. Most of those jobs are dependent on federal spending, labor experts say.

"What is developing in Washington is definitely cause for concern," Mr. Story said. He and other area economic development experts have been batting around the potential effects of the GOP plan on area economies but have not arrived at a consensus on what to do if the federal budget cuts are severe.

If the Republicans' proposal to eliminate up to three federal agencies and scale back others doesn't pan out, the county's economy could be in for a burst of economic activity by the end of the year or early 1996, Mr. Story and others predict.

Commercial construction would lead the way, since the county's once-glutted office market is experiencing a decline in vacancy rates. Countywide, the vacancy rate is down to about 9 percent, Mr. Story said. In some areas, such as Ellicott City, it is as low as 5 percent.

As vacancy rates drop further, banks will be more willing to finance commercial projects. That would fuel the county's economy as contractors hired more workers, Mr. Story said.

Already, there are signs of rebirth in the commercial sector. Last week, a Baltimore developer proposed construction of a speculative office building in one of Columbia's office parks, and a new office building was just completed off Broken Land Parkway in Columbia.

Guy Caiazzo, an Ellicott City-based real estate investment expert who sits on the Howard County Economic Indicators Committee, a group of business and government executives, is cautiously optimistic.

"I wouldn't characterize what we'll see as a miniboom," he said. "The banks are going to be pretty conservative this time around."

Interest rates important

Mr. McMillion, the consultant, believes the strength of the county's economy in the next six to 12 months will heavily depend on two factors: stable or declining interest rates and the creation of high-paying service jobs in such fields as medicine, law and consulting. Such jobs are needed to replace wages -- and taxes -- lost to the shrinking of payrolls at defense companies, he said.

Overall, the county's economy is growing at a "modest pace," says Mr. Story, and some data suggest it is among the state's soundest.

For example, Howard County's 3.1 percent unemployment rate in March was down from 3.5 percent during the same month in 1994, the lowest in the Baltimore metropolitan area and far lower than Baltimore's 7.7 percent.

"When you are looking at a 3 percent unemployment rate, what you are really seeing is full employment," said Mr. Story. Mr. McMillion agreed, saying, "Howard County's economy is really among those in the best shape in the [Baltimore] area."

Other trends bolster that conclusion:

* First-time claims for state jobless benefits in the county dropped to 1,932 during the first quarter of 1995 from 2,408 during the same period in 1994, a 20 percent decline, which the the state Department of Employment and Economic Development considers significant.

* New residential gas and electric hookups, a measure of activity some economic experts use as a economic health gauge, are up. There were 842 such hookups in the county during the first three months of the year, up from 535 during the same quarter last year, according to Baltimore Gas and Electric Co.

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