WASHINGTON -- The Middle Atlantic region's economy weakened in January and early February, but Maryland's financial future is expected to be much brighter, according to a report by the Federal Reserve Board.
Across the five-state region, retail sales slipped, manufacturing declined, construction remained dormant and tourism was soft, said the report released yesterday.
The district includes Maryland, Virginia, West Virginia, North Carolina and South Carolina as well as Washington, D.C.
Bankers, retailers, construction workers and port officials alike pointed to one major factor when explaining their economic plight: the war in the Persian Gulf.
Maryland Comptroller Louis Goldstein agreed that the war was the final blow to consumer confidence, which already was weakened by the savings and loan crisis, problems in the banking and insurance industries, the large federal debt and high unemployment rates.
"Any time you have a war, people get scared and they hold back," Goldstein said.
According to the Federal Reserve, retailers reported that total sales -- especially for big-ticket items -- had softened. Manufacturers said sales were poor and shipments and orders were down.
At the ports in Baltimore, Charleston, S.C., and Hampton Roads, Va., exports increased compared to a year ago, but didn't change compared to December, the report said.
Loan demand was down, with bankers blaming the war and sluggish economic conditions, the report said, noting that several bankers said the economic downturn had 'dampened consumers' willingness to borrow."
Although the report was written before the cease-fire in the Middle East, business and industrial representatives said they were more optimistic about the economic outlook than they had been a few weeks ago and that they expected the end of the war to alleviate many of their problems.
Although the recession's not over yet, Goldstein predicted that economic conditions will improve noticeably by the third quarter.
"You had a combination of things you never had before, but now it's turned around.
You have a breath of fresh air in people's hearts and minds," he said.