Baltimore area economy grew in second quarter


A survey by a national accounting firm shows that the Baltimore area's economy grew during the second quarter for the first time in four quarters.

The Grant Thornton Index said that an increase in construction permits and a modest gain in consumer spending began to lead the local economy out of the recession between April and June.

"In Baltimore, it appears that construction permits and retail sales are the areas that have been driving the economy recently," said Morton Goldman, managing partner of Grant Thornton's Baltimore office.

He said that construction rose because of pent-up demand for housing by consumers who put off buying a home last year. "If you start looking at the construction permit statistics for the last three or four quarters, there was a significant decline," he said. "That means people were renting, not buying."

But Mr. Goldman was reluctant to say whether the economic recovery had taken root.

"Economists don't have any idea whether the upturn will continue," he said. "A lot depends on the balance of the economy, particularly employment." If unemployment, traditionally a lagging indicator of economic performance, continues to rise, it could push other sectors of the economy back into recession, he said.

"I'm moderately optimistic," Mr. Goldman said.

Michael Conte, an economist at the University of Baltimore, had a similar view.

He said that there is a 35 percent to 40 percent chance of a "double dip" recession, meaning that economic growth could falter and a downturn resume.

Economists nationally have raised the prospect of a renewed recession, but most, like Mr. Conte, think it's unlikely.

"The unemployment rate will flatten out [and] the rate of business failures will remain steady" in coming months, Mr. Conte said. "The big question will be retail sales."

The Grant Thornton study surveys 24 metropolitan areas across the country. According to the firm's index, the local economy grew in 12 of those cities during the second quarter and there was very modest growth nationwide.

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