Experts say Md. economy to stay robust Employment growth forecast at 1.7%, despite U.S. slowdown

Auto, home sales up

Economists gather at RESI conference to make predictions


October 30, 1998|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

Maryland's economy should remain healthy for the next nine months, and its strength beyond that depends on the national economy, economists at the 1999 Economic Outlook Conference said yesterday.

The most telling statistic to emerge from the conference, which was sponsored by the Regional Economic Studies Institute (RESI) at Towson University, is the forecast of a 1.7 percent employment growth rate in the state despite an expected national slowdown, the economists said.

The employment growth rate for 1998 is projected to be 2.1 percent, and that was for a year with a robust national economy, the economists said.

That figure suggests that Maryland is moving toward closing the gap between its employment growth rate and that of the nation, which is between 2 percent and 2.2 percent.

Continued growth among high-tech companies might allow the state to begin catching up with its main competitors, Virginia and Delaware, the economists said.

Southern Maryland will lead the state in employment growth at about 3.5 percent, with the Baltimore area posting the slowest job gains at about 1.5 percent, according to the forecast.

At the daylong conference, RESI economists presented national and statewide indicators to fashion predictions for next year. The developing picture is encouraging, they said.

Maryland's economy is "as healthy as it has been this decade," said Michael Funk, a RESI economist.

Indicators such as soaring sales of homes and automobiles, and a declining unemployment rate, show that the state has momentum going into the next economic cycle, said Anirban Basu, a RESI senior economist.

Because of its relatively small manufacturing export sector, Maryland is not as exposed as some states are to the economic crisis in Asia, Russia and parts of Latin America, he said.

The national economy is slowing, but that is not an indication of a recession, the economists said.

tTC "The U.S. has been growing alone," said Michael A. Conte, RESI's director. "The balance of the world has been growing modestly or in recession."

Three issues will determine the health of the nation's economy next year, Conte said: instability in international financial markets, lingering effects of the General Motors Corp. strike, and fluctuations in domestic stock prices.

The effects of last summer's GM strikes, which idled more than 192,900 workers and all but two of GM's 29 North American assembly plants, sent the U.S. index of leading economic indicators down.

"Normally, it would be cause for concern and could serve as a warning for a recession," Conte said.

If the effects of the strike are subtracted, the dip in the leading index shows "it was mainly an artifact of the strike, not an indication of a recession to come," Conte said.

The gyrations of the market have also caused concern, but those ups and downs are normal, Conte said, adding that there have been eight bear markets since 1916, the most recent from 1990 to 1991.

The bottom began falling out of the current market July 17, "but we believe the stock market will stabilize and do better during the balance of the year," he said, adding that the prediction must be hedged based on the international situation.

About 380 business people paid to register for the conference at Martin's West in Woodlawn.

The conference also included panel discussions on manufacturing, biotechnology, financial services and health.

Republican gubernatorial candidate Ellen R. Sauerbrey, who was introduced by Jack Kemp, the 1996 Republican nominee for vice president, participated in the gubernatorial discussion, answering questions from analysts and audience members.

Gov. Parris N. Glendening did not attend. He sent Secretary of State John T. Willis in his stead.

Pub Date: 10/30/98

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