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A recession might be looming, economists say, but Maryland Board of Revenue Estimates Director Andrew Schaufele believes the state’s close ties to the federal government and the end of the federal sequester budget cuts in 2021 could buoy the state’s economy.

During a panel discussion at Tuesday’s Greater Baltimore Committee meeting, Schaufele cautioned business leaders that he does not as a rule forecast economic recessions. However, Maryland’s economy did fare better than the rest of the country during the Great Recession after the housing and financial crisis in 2008, Schaufele said.

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“This is typical," he said. “We never rise as fast or fall as far.”

That’s because the federal government historically has been one of the state’s top employers, with federal workers’ salaries averaging about $105,000 a year, Schaufele said.

However, while the rest of the country was rebounding, Maryland’s own recession extended from 2011 to 2014 as automatic federal spending cuts referred to as the sequester went into effect. State officials estimated in 2013 that Maryland lost about 21,000 jobs to sequester cuts. The sequester is set to end in 2021.

Still, Schaufele said he and other state officials are advising lawmakers to save budget surpluses for a rainy day fund in the event of a recession.

Another GBC panelist, Tom Barkin, president and CEO of the Federal Reserve Bank of Richmond, Virginia, said a recession is not a certainty.

“I don’t see a recession being imminent, unless of course we talk ourselves into one,” said Barkin, who was appointed head of the Richmond Fed in late 2017.

The economy has been sending conflicting signals amid uncertainty around trade and politics, Barkin said. He pointed to the United Kingdom’s pending withdrawal from the European Union, troubles in the Middle East, immigration and the ongoing trade talks with China as sources of uncertainty that have hampered business confidence.

As long as consumers keep spending, Barkin said, the U.S. economy will be “in a good place.”

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