For 18 months, the United States has weathered economic storms pummeling other parts of the world, most notably Asia. While the problems have hurt U.S. manufacturers and distended the country's trade deficit, the underlying economy has continued to grow. As an insurance policy, the Federal Reserve has reduced short-term interest rates three times in recent months, raising the U.S. money supply and stimulating the economy. Many analysts believe the Fed will continue the stimulus this year, but they also think international echoes will get louder in the United States.
"We expect a slowdown nationally," said Ann Battle, an economist with Crestar Bank in Richmond, Va., echoing many of her colleagues.
The U.S. economy grew by more than 3.5 percent last year, measured by gross domestic product, many analysts estimate. Predictions for GDP in 1999 range from just 1 percent to more than 3 percent, but the consistent theme is one of deceleration.
In addition to brittle foreign economies, prognosticators point to the American consumer as a risk factor.
"Last year it was the consumer in Maryland and the consumer nationally that drove very strong growth," said McMillion. "This spending is really unsustainable. Consumer spending and consumer borrowing have really gotten out of hand."
Even so, nobody is expecting a steep drop in the nation's or Maryland's economies. Maryland will have added jobs at a rate of between 2.2 percent and 2.5 percent for 1998, about the same as the country as a whole. Some forecasters, including those at Towson University's Regional Economic Studies Institute, think Maryland job growth could slow to as little as 1.4 percent this year, hindered by a more sluggish national economy.
Others think Maryland will best the nation, helped in part by its small reliance on manufacturing. Patrick Arnold, director of labor market analysis for the state Department of Labor, Licensing and Regulation, predicts another year of 2 percent job growth or better.
And even 1.4 percent job growth would be respectable for Maryland this year, given its low unemployment rate and lackluster long-term performance.
"I think we're going to finish  either at or a tad below the U.S. average, and [this year] we're going to be at or a tad above," said the Fed's Murphy. "I don't see anything big to worry about."
Pub Date: 01/24/99