Maryland's economy loses sizzle

2.2% growth rate in 2nd quarter is down from 1st quarter's 6.6%

But ahead of U.S. pace

State is viewed as nicely situated for next decade

State Economy

August 27, 1999|By William Patalon III | William Patalon III,SUN STAFF

Maryland's economy grew at a 2.2 percent annual clip during the second quarter, a marked slowdown from the sizzling 6.6 percent first-quarter pace but still better than the national average of 1.8 percent, First Union Corp. economist Mark Vitner said yesterday.

Maryland is "basically in the right industries, has the right mix" of businesses, said Vitner, who covers Maryland for First Union.

"We don't have all the schools -- especially in the high-tech arena, like MIT or CalTech, though we do have Johns Hopkins, which is on the cutting-edge in the biotech arena.

"But Maryland has a solid presence in all the industries of the future.

"And this means that, even if [the state's economy] slows significantly next year, it's well-positioned for the next decade."

Being in the right businesses already is paying off, according to Vitner's research.

Over the past 12 months, Maryland's gross state product grew at a 4.2 percent pace, also faster than the nation, which saw gross domestic product (GDP) increase at a 3.9 percent annualized rate.

That's brisk. Federal Reserve Chairman Alan Greenspan believes that growth of about 3 percent is about all an economic system can sustain without inflation surfacing.

Statewide growth in the biotech, Internet and telecommunications businesses soared at nearly a 9 percent rate in the second quarter and is up 10.4 percent year-over-year, Vitner said.

Maryland's emergence as a warehouse and distribution hub also is bearing fruit. The proliferation of warehouses and distribution centers in this decade has been criticized by some who contend that these aren't high-paying manufacturing jobs. But when the economy surges, goods are shipped through those centers, creating jobs and generating revenue for the area, Vitner said.

Business of this type grew at a 7.6 percent rate for the quarter and is up more than 10 percent during the past year.

Maryland's manufacturing sector also appeared robust: Hours worked in the steel industry during the second quarter rose at an 8.7 percent annual rate.

But Vitner conceded that at least some of that increase is a result of a major modernization effort at Sparrows Point, in which thousands of contractors were brought in to buttress the work force there.

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