Economists optimistic regardless of Nov. 2 victor

Bush or Kerry election seen as no hindrance to stock prices or growth

October 01, 2004|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

Economists with Baltimore's largest investment houses are optimistic about the economy next year no matter who's elected president, saying that corporations and consumers have balance sheets that allow them to spend.

Speaking yesterday to about 300 executives at the Greater Baltimore Committee's annual business outlook conference downtown, Alan Levenson, chief economist for T. Rowe Price Group Inc., said he expects U.S. economic activity will continue to grow at the same pace as it has this year.

Stocks are poised for a gain, predicted Richard E. Cripps, chief market strategist for Legg Mason Inc., regardless of whether President Bush is re-elected Nov. 2 or challenger John Kerry wins.

Local leaders said they think that bodes well for the Baltimore region, which wasn't as hard hit by the 2001 recession as the nation was and began rebounding more quickly.

The turnaround is most striking in the city, which is attracting reinvestment after lagging behind the suburbs for years, said Donald C. Fry, president of the Greater Baltimore Committee.

"As we look out over our skyline in Baltimore, we certainly see significant signs of development by just the number of cranes that we see operating on the horizon," he said after the event, the 22nd outlook conference held by the business group.

Levenson told business leaders that the much-talked-about "soft patch" in June, when hiring and consumer spending fell nationwide, is old news.

"We're in a transition to more balanced growth," he said.

Some economists are deeply concerned about the impact of rising oil prices, which hit $50 a barrel this week, but Levenson argued that the economy's "cruising speed" makes it only marginally harmful.

Cripps said the oil price rise has had a clear effect on companies that count on consumers' pocket money - Wal-Mart Stores Inc. hasn't been seeing the sales growth it expects - but he doesn't foresee more increases at the pump. Oil production is bound to rise, he said.

He said companies have large amounts of cash squirreled away, which he considers a good sign. And despite Americans' increasing tendency to borrow, their assets outnumber their debts 5-to-1, he said.

"The consumer is in pretty good shape," Cripps said.

Towson University President Robert L. Caret offered in his speech a warning to businesses about two work force development problems he sees: rising demand for higher education at a time of dwindling state support and falling interest in math and science among students even as the need for workers in those fields grows.

Maryland has a shortage of 2,000 to 4,000 nurses and is projected to be 11,000 to 20,000 nurses short by 2012, Caret said.

But he said he probably can't increase the number of slots for nursing students at Towson without more government funding because it's an expensive program. "Access is going to be a real challenge," he said.

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