What will 1997 bring for the economies of Maryland and the nation? Jay Hancock, The Sun's economics writer, interviewed three experts to find out. They are Patrick Arnold, director of Maryland's Office of Labor Market Analysis and Information; Michael Conte, director of the Regional Economic Studies Institute at Towson State University; and Mark Zandi, chief economist with Regional Financial Associates, an economic forecasting firm in West Chester, Pa.
Q. Let's start with the nation. What will the final figures show for the country's economy in 1996, and what are you forecasting for 1997?
Zandi: For 1996, we're expecting real growth in the gross domestic product of 2.3 percent, and for 1997 we expect growth of 2.5 percent.
Conte: All the indications are that for 1996, we will have wound up with real GDP growth of 2.4 percent.
And that's really pretty good, given that the watchword at this time last year and in December of 1995 was that 1996 was going to be a recession year.
Q. Can you put that in perspective? How does 2.3, 2.4 percent compare with history?
Zandi: In the '90s, 1994 was the strongest year for the country, with growth of 3.5 percent. Ninety-one was the weakest. It was minus 1 percent.
Conte: 2.4 percent is nothing to write home about in one sense because prior recoveries or expansions have seen GDP growth on average in early to middle stages of 3 and 5 percent. On the other hand, it is remarkable in light of the fact that we are not spilling blood with unsecured debt, junk bonds, like we were in the '80s. We're not fighting a war, as we were in the '60s. And we're not building a huge infrastructure of highways as we were in the '50s. Those factors drove past expansions. In that light, I think 2.4 percent is much better than it sounds on the surface. It's real, solid, sustainable growth.
Q. Sustainable through 1997?
Conte: There's a mixed bag of views out there. A lot of people in the auto industry think that auto sales are going to go down this year. There has been a lot of pessimistic talk about lapsing into a recession. But our leading index is showing nothing but gain. Because we don't think it's going to be extraordinary, we come out with a forecast in the 2.5 to 3 percent real growth range.
Q. What about Maryland? We've lagged the nation all during the 1990s. Will we catch up this year?
