Lasting impact expected from downturn

Outlook Conference hears three experts

November 01, 2001|By William Patalon III | William Patalon III,SUN STAFF

While the nation will eventually rebound from its first downturn in more than a decade, the slowdown will have a lasting impact on key economic, technological and stock market trends, three experts predicted during the Greater Baltimore Committee's annual Business Outlook Conference downtown yesterday.

The GBC holds this conference each year to give business leaders information on the key factors that could help their companies or organizations in the year to come. Yesterday's affair was held at the Hyatt Regency Baltimore on Light Street.

Alan D. Levenson, chief economist for T. Rowe Price Associates Inc., said the U.S. economy was due for a slowdown after its longest ever uninterrupted boom. And while the downturn was likely deepened by the Sept. 11 terrorist attacks, the swiftness of the rebound will depend on how aggressively the Federal Reserve and federal government respond - the Fed with more interest rate cuts and Washington with pump-priming infusions worth tens of billions of dollars, Levenson said.

"I'm bullish on America" due to its long-term prospects, Levenson said.

The new worry about terrorism is likely to influence technology-development trends in this country, said Daniel B. Gordon, a director and senior technology consultant for PricewaterhouseCoopers, the accounting and consulting company.

According to Gordon, the damage wrought by the attacks will put a premium on technologies that are more ubiquitous and accessible from anywhere. Such technologies will keep a company from having to have all its assets highly centralized, meaning employees will be able to work from virtually any location. But many of these technologies are not yet ready for prime time, either because they need to be developed more, face too many competing technical standards, or have yet to penetrate the market enough to make them viable, Gordon said.

One example is wireless telephones that are fully Internet-enabled. Many existing telephone networks are still voice-based - and not optimized for data, as will be needed. They're not fast enough, and the wireless handsets still face many technical challenges. A key one: The view screens of most wireless phones remain far too small for navigating entire Web pages, Gordon said.

As for the stock market, the technology sector may not be the best place to look for profitable opportunities, said Richard E. Cripps, chief market strategist for Legg Mason Inc. Fast-climbing, steeply valued shares of high-technology companies were the most-rewarding stocks for much of the late 1990s. But the stocks to look at over the next few years probably will be those that pay dividends, or shares in small and medium-size companies, Cripps said.

Even then, investors should anticipate average annual returns in the range of 7 percent - nowhere near the gains of 20 percent, 30 percent or more of the past few years, he said.

In the months to come, investors should avoid making "a lot of decisions, or quick decisions, [sticking instead] to good decisions," Cripps said.

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