Maryland will add 40,000 jobs next year, accelerating slightly from its present crawl but still trailing the nation's economy and still subject to sabotage from the Federal Reserve, Towson State University economist Michael Conte said yesterday.
The first three months of 1997 "will start out a little slow," Conte said at an economic conference in downtown Baltimore yesterday, "but going into the year we're going to have a significant pickup."
A closely followed observer of Maryland commerce, Conte has furnished forecasts in recent years that have been consistently rosier than those of many of his colleagues, and yesterday's hewed to the rule.
He says Maryland employment will increase by 2 percent in 1997; that's the 40,000 jobs. Other analysts expect growth of 1.5 percent, 1 percent or less. But Conte defends the higher targets, saying they've been borne out by recent history.
Maryland growth in 1997 won't come in a straight line or help industries equally, Conte and a phalanx of other Towson State economists told conference participants. The service sector is expected to add 3.7 percent in its employment; Maryland factories are expected to lose more jobs.
And the government work force is expected to grow by 0.7 percent despite a slight decline in federal jobs. The difference will be made up in local government, as municipalities cope with rising student populations.
And despite the expected speed-up in job creation, the more sobering intelligence is that "the type of jobs we're adding in this state are not the high-paying jobs that were added at such a fast and furious pace in the 1980s," Conte said.
As in most of this decade, many of Maryland's new jobs are
coming in restaurants, stores, hotels, amusement parks and other low-paying venues. It is losing positions in banks, factories, utilities and other well-paying areas.
For example, Maryland gained 9,700 jobs in the 12 months ending last June in the "business services" category, which runs from janitors to computer programming. Average weekly wage: $497. It lost 1,900 federal government jobs in the same period. Average weekly wage: $852.
The always-streaky residential building business will "come back relatively strongly in 1997," Conte said.
As always, Maryland's fortune is linked to the national economy's, and by extension to a sober group of central bankers in a big, marble building near the Potomac. If the Federal Reserve gets spooked by inflation specters next year and tightens the money supply to cast them out, Maryland's performance will fall short of projections, Conte said.
And the Fed may, indeed, move. Christine Chmura, chief economist for Richmond, Va.-based Crestar Bank, expects that worker scarcity and a growing economy will compel companies to raise wages and feed Fed inflation fears. As a result, Chmura expects a Fed tightening in March that would boost the Fed funds rate, a key short-term interest rate, by a quarter of a percentage point.
Conte expects that inflation will remain calm in both fact and appearance. But, he added, "we are concerned that the tea leaves might not be read absolutely correctly" and that the Fed might move to boost rates.
Both Conte and Chmura agreed that year-end holiday spending in Maryland and America will be decent, "much better than last year but still not spectacular as we look back to the last five years," Chmura said.
Conte expects 1.7 percent employment growth in 1996 for Maryland when all the numbers come in, the same projection he used a year ago. That's significantly better growth than the initial U.S. Labor Department estimates for this year, but Conte said he expects them to be revised upward later when precise payroll data is reported.
For example, he said, Towson State's economic staff originally predicted job growth of 1.46 percent from the fourth quarter of 1994 to the fourth quarter of 1995. Initial government reports showed a job loss of .05 percent over the period; eventually they were revised upward to show growth of 1.38 percent -- close to his estimate, he said.
Pub Date: 12/13/96