Md. may be in for great '98 Addition of 50,000 jobs, healthy growth forecast by group

Economy

December 03, 1997|By Jay Hancock | Jay Hancock,SUN STAFF

Maryland is on track to add 50,000 jobs in 1998, yielding employment growth of 2.2 percent and tying 1994's performance for the best economic year of the decade, a respected forecasting group said yesterday.

Freed from the dragging banking and federal sectors that encumbered it for much of the 1990s, pushed onward by gains in technology and communications, Maryland's economic future and the nation's now follow parallel paths, said analysts from the Regional Economic Studies Institute at Towson University.

"In the last eight quarters, we have seen Maryland employment growth accelerating to match the U.S.," said Michael Funk, an economist with the institute. "We are expecting continued healthy growth in Maryland through 1998."

The Towson group, which presented the forecast at a conference in Woodlawn, expects job growth of 2.1 percent for this year when the final figures arrive. That contrasts with growth of 1.2 percent in 1995, for example.

If the targets are struck, the state will have more than 2.3 million jobs by the end of 1998 and will have added about 250,000 jobs since the bottom of the recession in 1992.

The projections imply continued moderate prosperity for Maryland business people and continued tight labor markets. With Maryland unemployment below 5 percent already, further job growth may aggravate worker shortages and push up pay, analysts said.

Gov. Parris N. Glendening took full credit for the improvement, saying in a speech to the group that "Maryland's economy is strong and getting stronger" because of an income-tax cut passed this year, improvements in state business regulation and investments by Maryland's "Sunny Day" development fund.

Economists tend to cite low interest rates, a healthy national economy and stability in some of Maryland's once-weak sectors as the main reasons for the job surge.

Not everybody is happy with Maryland's progress.

"We're still not doing good enough," Ioanna Morfessis, chief executive of the Greater Baltimore Alliance, told the group. "Anybody who thinks 2.2 percent annualized growth is really great is not paying attention" to other states booking far better statistics, she said.

Whatever Maryland's destination, it now is more firmly tied to that of the nation, analysts said. For that reason, country-wide issues such as interest rates, the budget deficit and the Asian economic crisis have more relevance here than ever.

Michael Conte, director of the Towson institute, disputed predictions that currency devaluations and troubled economies in Asia would cause deflation -- widespread decline in prices -- in the United States.

After investors and economists have fretted over inflation for three decades, "I am completely baffled about all this new concern about prices not rising fast enough," Conte said.

Although wage and salary increases seem to be accelerating slightly, even higher productivity increases will keep them from being factored into prices, Conte said. That means inflation will stay tame next year, he said, and that means interest rates will stay low.

Unless, of course, the Federal Reserve tightens the money supply, said Timothy J. Martin, senior economist for NationsBank Corp.

"We feel that the Fed will be on hold basically because of the international crisis," Martin said. "Once the Asian crisis settles down, the risk is that the Fed will tighten at their Feb. 3 and Feb. 4 meeting."

Maryland's growth next year won't be even, either, economists said. Industries expected to post rapid growth include construction, distribution, home-furnishing stores, telecommunications, financial brokerages, hotels, data processing, engineering and advertising.

Sectors expected to struggle include manufacturing, railroads, shipping, apparel stores, federal agencies, banks and insurance carriers.

Pub Date: 12/03/97

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