Marylanders keep right on spending it

Despite signs of slowing in areas such as housing

The double whammy

Outlook for growth appears good in most of state

June 04, 2000|By William Patalon III | William Patalon III,SUN STAFF

With good jobs available for the asking, and confidence among shoppers still high, Maryland consumers continued their free-spending ways during this year's first quarter as the U.S. economy continued its record run.

Still, there were a few signs of slowing in this year's first three months. In the housing market - important because of the ripple impact it has on the economy - the double whammy of rising interest rates and few homes for sale in some of Maryland's most desirable neighborhoods led to a statewide decline in home settlements for the second straight quarter.

That trend may well continue: The Federal Reserve is widely expected to continue its campaign of boosting short-term interest rates to mute economic growth, making it unlikely that home sales will resume their brisk clip anytime soon, experts said.

In general, economists said, the outlook for growth in the state is still very good, however.

"I expect that a lot of people will continue to be enthusiastic consumers," said Anirban Basu, director of applied economics for RESI, the economic-research and forecasting group affiliated with Towson University. "Everyone who wants a job has a job ... and no one has concerns about long-term unemployment."

An analysis of The Sun's economic indicators shows that the state's overall health remains quite good. In some important categories or sectors, the growth rate has slowed from the frenetic pace reached during the middle of 1999. Even so, the statistics show that many of these categories are still ahead of where they were at the close of the 1999 first quarter.

During the first quarter:

Construction was a mixed bag under the weight of rising interest rates. The aggregate value of new construction contracts fell sharply - from $771.5 million in the fourth quarter to slightly under $590 million in this year's first quarter. Residential construction jumped as consumers opted to sign contracts before mortgage rates rose higher.

Manufacturing, which has suffered a fairly anemic recovery nationwide, held its own across the state. The average weekly manufacturing pay grew by about $13 a week to an average of almost $603 for the first two months of this year compared with the first two months of last year, while hours worked by manufacturing employees held steady at about 41 a week. However, both figures represented a slight drop-off from the fourth quarter of 1999.

Tourism continued to do well, with state collections of hotel and motel room taxes up by about 20 percent, both in Baltimore and statewide. And passenger traffic at Baltimore-Washington International Airport - though not purely due to tourists - was up 14.5 percent in the first two months of 2000 over the corresponding period a year earlier.

Consumer spending accelerated at a double-digit clip in the first quarter. Demand remained strong for such big-ticket items as new cars and trucks. Consumer spending nationwide rose at only a single-digit pace in the first three months of this year.

Total employment in the state rose by more than 100,000 jobs, to about 2.43 million, in the first two months of this year from the corresponding year-earlier period - despite a labor shortage that threatens hiring gridlock within companies that wish to expand. Job growth is usually viewed as one measure of the overall state of business within an economy.

Maryland's unemployment rate dropped to 3 percent in March, an all-time low for that month and more than a percentage point below the U.S. figure of 4.1 percent. The state's unemployment rate was down from 3.5 percent in February and 3.8 percent in March 1999.

The flush times and high confidence was evident in consumer spending. State sales tax receipts for goods such as clothes and furniture rose to a record $245.4 million in the first quarter, a 13.8-percent jump from the corresponding period last year, and 12.2 percent ahead the 1999 fourth quarter.

Local retailers - as well as national retailers with a local presence - said they've never seen it so good. At Dahne & Weinstein, a high-end jeweler based in Lutherville, customers shopping for its near-museum-quality antique and estate jewelry aren't deterred by price tags of $10,000 to $100,000 and more. And they want items to be in stock, the company's head said.

"We've had an extremely strong year," said Stephen A. Weinstein, president of the jeweler, which was founded in 1939. "It's been quite an interesting year, as well as a good year."

Retailers that sell more popularly priced wares report similar success. Mike Gaeta, store manager for Dick's Sporting Goods near Bel Air in Harford County, said that in his 13 years of retailing he's "never ever" seen such strong consumer sentiment. Gaeta is reasonably optimistic that spending will remain high.

"So far, so good," he said.

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