'07 economic optimism voiced

County well-positioned for next year, Chamber of Commerce president says

December 24, 2006|BY A SUN REPORTER

Howard County's economy began 2006 with a boom, finished with a flurry and remains well-positioned for 2007, the leader of the county Chamber of Commerce says.

Pamela J. Klahr, president and chief executive officer of the chamber, said last week that there is "significant confidence" in the economy among businesses.

Almost 80 percent of the businesses expect sales to increase, and 60 percent plan to add employees in the coming year, according to a survey conducted by the chamber.

"For at least the first six months [of 2007], it's a very positive picture," said Klahr.

Richard W. Story, chief executive officer of the Economic Development Authority, said the county has had "a very good year."

"I'm optimistic about next year. Given the fundamentals of our economy, all of the sectors are hitting on all cylinders - financial services, health care, as well as defense contractors," he said.

This year began with a bang in job growth, which Story regards as the most critical indicator of the economy.

In the first quarter, he said, the county was on a pace to reach 5,000 new jobs, a figure not achieved since 2000, when 7,130 jobs were added.

While that pace slowed, the county was still in line to end the year with more than 3,000 new jobs, according to a recent economic report by the chamber.

Although final figures for many indicators will not be available for several weeks, preliminary ones reveal strength in many areas:

The average weekly wage rose from $873 to $948.

New businesses in the country grew by almost 300 firms, to about 8,600.

The median household income rose to $88,600 from $84,200.

Unemployment, which has been low for a decade, is at 2.6 percent, compared with last year's average of 3 percent.

The vacancy rate in commercial office buildings is about 10 percent - far below the 24 percent rate that existed during the 2000 recession.

"We will always have a strong economy - stronger than most of the state," Story said. "We're not recession-proof, but we've got an incredibly robust economy, and one reason is because we're not dependent on any one industry sector."

Klahr uses another indicator to gauge the economy: entertainment.

"We hear from our restaurants that there are a lot more parties, lunches and dinners," she said. "Business is entertaining again, and that says that they are more comfortable with their budgets and their profits."

The exception to the overall strength has been the housing market, particularly in the high-end segment.

"The biggest change that we see obviously is in building and real estate," Klahr said. "The really huge homes - the $700,000 and up - have really had a huge slowdown.

"The length of time that a home is on the market has tripled. The selling frenzy is over."

Klahr said the slowdown in that market was necessary because there was an unsustainable escalation in housing prices over the past five years. "It is adjusting to more normalcy, which we think is a good indicator," she said. "People are making sounder decisions."

Although the county's economy is expected to remain strong, the new year will bring challenges, principally the difficulty in finding people for the jobs being created, Klahr said.

"The jobs are here," she said. "The question is where do you get the people to fill them?"

Since there are so many jobs being created in the service sector, many of the prospective employees live outside the county and need an improved public transportation system, Story said.

Those improvements, though, are expensive and take years to implement, so there will be no quick resolution to the problem, Story and Klahr said.

A related, but long-term, issue, they said, is the need for vastly more affordable housing in the county for the work force.

The county's land-use policies, Klahr said, have exacerbated the scarcity of affordable housing as well as the runaway appreciation in land and housing prices, and threatened the health of its economy.

"The new administration [of County Executive Ken Ulman] is going to have to take a look at what our policies have been," she said.

The administration must promote growth to sustain the economy, Klahr added.

"We can't be no-growth. Slow growth, planned growth, yes," she said. "But we can't be no-growth because there's nowhere to go if we do that. ... To keep the economy and lifestyle that we have enjoyed in Howard County, we can't do that."

Klahr also said that business people are worried about the fiscal policies of Ulman, Gov.-elect Martin O'Malley and the Democrat-controlled Congress.

"The biggest concern is really the unknown," she said, referring to the political changes resulting from last month's general election. "There is concern about how that is going to affect things. Does that mean that there's going to be an increase in taxes for businesses? It's all a big question mark right now."

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