Moving forward, but not as fast

Growth: The state's economy is expected to increase at a rate of nearly 4 percent.

January 23, 2000|By William Patalon III | William Patalon III,Sun Staff

Buoyed by such sectors as technology, biotechnology, financial services and commercial construction, the Maryland economy will continue to surge this year, although not at last year's torrid pace.

But 1999 was a year in which Gross State Product output was estimated to have grown by as much as 4.7 percent -- the second straight year in which growth exceeded 4 percent.

"For 2000, we estimate that there will be full job growth and income growth and Gross State Product growth, though the rate will be somewhat below the level of 1999," said Pradeep Ganguly, director of the Office of Business & Economic Research for the Maryland Department of Business & Economic Development. Overall, the year 2000 will be "another strong year."

Mark Vitner, an economist for First Union Corp. in Charlotte, N.C., who follows the Maryland economy: "Even if it slows into the 3 percent range from 4 percent, that's still pretty good."

The Regional Economic Studies Institute, the economic and business research arm of Towson University, is forecasting that Maryland will grow at a 3.7 percent clip this year.

A stronger economy now

This Maryland economy is very different from the one that slid into a deep and lingering recession in the early 1990s -- a recession that took a significant personal toll on many Marylanders, as companies downsized significantly or left the state altogether.

Many economists believe that Maryland has a well-rounded, well-diversified economy, which leaves it in much better shape than it was in the early part of the decade, when financial services and work for the federal government were its main-meal fare.

Among the important sectors:

* The retail market should show good growth, though analysts say it will be nowhere near the gangbusters growth of 1999. Big-ticket goods sold particularly well, but 1999 was so good, and consumers have amassed so much debt, that 2000 will be hard-pressed to become a carbon copy of the year that just ended, analysts and economists say.

* The brokerage industry, a key portion of the state's financial services sector, is projected to notch another strong year, as money continues to pour into stocks, bonds, mutual funds and other investments -- even if the stock market sags.

* Commercial construction will continue to turn in nice growth but the single-family housing market will continue to slow, burdened by interest rates that could go up again, thanks to a much-anticipated increase by the Federal Reserve at its policy meeting in February.

* Technology -- telecommunications, computers and biotechnology -- will continue to be a big story in the year 2000, just as it was in 1999, with local companies in each of those three sectors continuing to make an impact, both locally and nationally.

Tech and biotech

The late 1990s bulk-up of the state economy owes some of its success to technology -- either from purveyors, such as telecommunications-equipment providers like Ciena Corp., or users, who are employing information technology to overcome a serious labor shortage and to run lean and highly competitive operations.

Maryland is also just beginning to enjoy the fruits of intensive investment in biotechnology, which some just a few years ago believed would not pay off for decades.

Commercial construction is benefiting because it's been tapped to build offices to house existing companies that are in an expansion mode, as well as startups. And the financial services industry is benefiting from a once-sizzling stock market that right now seems to have the bull -- at least temporarily -- munching grass in the pasture.

Nearly all of Maryland's counties are seeing robust growth, particularly high-tech centers such as Howard County, which saw job growth of 7.2 percent in 1997, 6 percent in 1998 and strong growth again last year, according to the University of Maryland.

City pulls ahead

Even Baltimore City is rebounding, seeing a full-year growth in jobs for the first time in at least a decade, says Charles McMillion, chief economist for the Washington, D.C.-based MBG Information Services, an economic consulting firm.

"Baltimore and Maryland boomed in the mid- to late 80s, went through an awful period in the early '90s -- which included a lot of talent being taken away -- but now we're seeing again strength in Baltimore and in Maryland," said McMillion, who has done a great deal of consulting work with the city through the years.

Baltimore still has problems: questions about lagging school quality, concerns about an eroding tax base and population exodus, not to mention a high murder rate that, in per capita terms, exceeds that of even New York City.

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