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Slower U.S. economy seen for second half of this year; Three panelists offer views at conference sponsored by GBC; Outlook


Until now, the United States has been strong in the face of enormous weakness in the global economy, but three local business leaders said yesterday that expectations need to be moderated.

George A. Roche, chairman and president of T. Rowe Price Associates Inc., told a business outlook conference that he expects a slowdown in the second half of 1999.

His fellow panelists -- Abraham Gulkowitz, chief global strategist and director of economics and strategy for BT Alex. Brown, and Raymond A. Mason, Legg Mason Inc.'s chairman and chief executive -- agreed.

"The region as a whole is not that dependent on trade, and Baltimore is even less exposed. We are well-positioned as a region and we should invest in our future," Roche said.

"Yet in the short-term, we, along with the rest of the country, should moderate our expectations."

The Greater Baltimore Committee, a private not-for-profit business and development group, sponsored the breakfast gathering at the Renaissance Harborplace Hotel.

The event also featured Richard C. Mike Lewin, the newly appointed secretary of the state Department of Business and Economic Development and former managing director of BT Alex. Brown.

The speakers were glowing in their current assessment of the U.S. economy, which is growing annually at nearly a 4 percent pace.

"We are in a sweet spot," said Gulkowitz, referring to a national unemployment rate of 4.3 percent, low interest rates, and the "best fiscal situation in generations."

The robust U.S. economy may offer some protection from an "accident-prone global environment," Gulkowitz said, but the world economy may not experience much growth in 1999.

Gulkowitz said volatility in 1999 could come from turmoil in the emerging markets, another year of recession in Japan, Internet stock mania and the introduction of the euro.

And that could be bad news for the United States, he said.

"We are the consumer of last resort. We have become the dumping ground for the world economy," Gulkowitz said. "Even our nonmanufacturing sectors will be affected subsequently."

Mason also predicts a gradual slowing in the U.S. economy. "The U.S. is truly an island unto itself," he said. "Optimism remains high -- maybe too high."

There are problems on the horizon, Mason said, including pressures on corporate profits and a stock market that's extremely vulnerable to bad news.

Considering the less than stellar outlook for the national and international economy, Lewin encouraged business leaders to support the state's effort to grow.

"Competitor states have the ability to rally the troops," Lewin said.

"It's OK to fight behind closed doors, but we must be upbeat when we talk about Maryland's business climate.

"We have to do a lot more to make the state more business-friendly. But our future, I truly believe, is limitless."

Pub Date: 1/22/99

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