December 16, 1995|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF
Maryland's economy is likely to avoid a recession for at least another two years but will continue to grow more slowly than a national economy that itself has slowed down, a panel of economists told a Greater Baltimore Committee gathering yesterday.
Experts from Towson State University said the state will suffer in the short term from federal budget cuts that stand to cost Maryland as many as 40,000 jobs. But they said interest rates are likely to fall still further and that a balanced federal budget eventually will be a positive economic sign even for a state heavily dependent on government employment and contracting.
The state probably will lag behind the nation's economy for at least three to four years as the United States closes in on its longest economic expansion since World War II, said George C. Georgiou, chairman of the Towson State Economics Department.
"Maryland is one of the few states whose defense industry was more than proportionately affected by a series of cuts in the defense budget," Towson State economist Chang Min Kong wrote in a study distributed at the breakfast meeting at the Omni Inner Harbor Hotel. "And, while still recovering from the impact of defense-budget cuts, the state economy has also been burdened with the loss of jobs caused by ongoing restructuring in the private sector."
The university's economics faculty believes that the value of goods and services produced or sold in Maryland will rise 1 percent to 1.5 percent next year after inflation. The national forecast is for 2.25 percent growth.
Towson State's economists believe that personal income in the state will grow by 4.8 percent in 1996 but that after inflation gains will range from 0.9 percent to 2.4 percent.
The expected growth in Maryland personal income is lower than that of 1995, which economists believe will be 5.1 percent. Inflation in metropolitan Baltimore, which includes about half of the state's population, rose 1.7 percent in the 12 months that ended in November.
The University of Baltimore Regional Economic Studies Program, in a separate forecast, projects that personal income in Maryland will grow about 5.04 percent next year, 2.1 percentage points more than UB's projected local inflation rate.
Towson State believes that Maryland unemployment will remain near the present 5 percent, less than the national average, but that job growth will stay sluggish.
Mr. Georgious said Maryland has to roll up its sleeves to change these trends.
"Negative fundamentals need to be combated if Maryland is not to be relegated to backwater status regionally and ultimately nationally," Mr. Georgious said, citing faster job and income growth in other South Atlantic states that remain poorer than Maryland.
