State's recession is called minimal

Key state economist says it likely began, ended in 4Q

May 23, 2002|By Bill Atkinson | Bill Atkinson,SUN STAFF

A top economist for the state said yesterday that Maryland likely emerged from recession late last year but that jobs probably won't start growing until the end of the year or into 2003.

"Probably we are out of the recession," said Pradeep Ganguly, chief economist for Maryland's Department of Business and Economic Development. "Maryland is doing better than you think that it is doing."

Ganguly, who spoke to reporters and economic development marketing officials, said he believes that Maryland has likely emerged from recession because of positive national trends. Manufacturing activity has picked up, layoffs are slowing, more companies are growing rather than shrinking and consumers continue to spend, he said.

"I am applying many of these [national] numbers to Maryland," Ganguly said. "It seems like we are outperforming the nation, and therefore I am fairly optimistic" about the state.

But Maryland, like the rest of the nation, will feel lingering effects of the recession because employers are not likely to hire for months to come, Ganguly said. Economists refer to this as a "jobless recovery."

In the 12 months that ended April 30, Maryland lost 7,600 jobs, representing 0.3 percent of its payroll jobs - jobs for which employers file unemployment tax returns with the state. Virginia's loss was steeper, with 31,000 jobs disappearing, or 0.9 percent of its payroll jobs, and the nation lost 1.4 million jobs, or 0.9 percent.

"Alarming? No," Ganguly said. "Something to be concerned about? Yes. It is significant, but it is not as bad as it could be."

The biggest declines in the state have come in the construction, manufacturing, wholesale trade and business services sectors.

Areas that have grown included retail trade, health services and government.

"Our economy is doing fairly well," Ganguly said. "It is holding its own."

Ganguly noted that Maryland's unemployment rate was 5 percent in April, down from 5.2 percent in March. In April, the nation's comparable unemployment rate was 5.7 percent, and in Virginia the rate was 3.9 percent.

All the above rates were not adjusted for seasonal variations.

"It is possible that [unemployment in Maryland] will edge up in the coming months before we see a real drop," Ganguly said. "Maryland is no laggard."

The nation's economy slipped into recession in March 2001 and emerged sometime in December, Ganguly said. Maryland fell into recession sometime in the fourth quarter of last year and probably emerged about the same time as the nation, he said.

Ganguly uses a much broader definition of a recession than the traditional two-consecutive quarters of negative growth. He looks for a broad decline in economic activity as measured by several indicators that include manufacturing output, job growth and household incomes.

The state is emerging in good shape because of its diverse economy, built around a strong service sector with a high concentration of construction, government and technology, Ganguly said.

"I think we have come out of this fairly well," he said. "We came out of this with minimal damages."

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