Maryland's economy finished 1998 with a flourish, adding 6,000 jobs in December and driving the state's unemployment rate down to 3.8 percent, its lowest point in almost a decade, the government said yesterday.
It was more persuasive evidence that Maryland is fully sharing in the thumping national prosperity that has erased government deficits, employed the jobless, made homebuilders work weekends and lifted the stock market to once-unimaginable heights.
"It just looks very, very good," said Charles McMillion, an economist who follows Maryland for MBG Information Services Inc., a Washington-based forecasting and consulting firm. "The mild winter that we're having has been very helpful. Low interest rates are helping. It's great."
The state's commercial energy is so strong that it's reaching into resistant areas such as Baltimore City and rural counties. Baltimore's unemployment rate in December was 6.6 percent, down from 8 percent in December of 1997 and at its lowest point since the 1980s, according to the U.S. Labor Department. Unemployment in Garrett County, on Maryland's western panhandle, fell from 14.1 percent a year ago to 10.2 percent in December.
"Things look really strong going into 1999," said Mark Vitner, a regional economist with First Union Corp. in Charlotte, N.C. "On top of the stronger growth right now in the core of Maryland's industries, the government contract sector seems to be coming back solidly, too. And we may even see increased defense budgets."
The last time Maryland's seasonally adjusted unemployment rate hit 3.8 percent was nine years ago, in December 1989. The U.S. jobless rate for December 1998 was 4.3 percent, still very low but significantly higher than in Maryland.
Maryland's seasonally adjusted jobless rate had been 4.3 percent in November.
Maryland appears to have added at least 50,000 jobs in 1998, its best annual employment growth of the 1990s. Vitner thinks 1998 growth could hit 60,000 jobs or better when final tallies arrive, and he's not the only economist who thinks this year promises more of the same.
Mark Zandi, an economist with Regional Financial Associates in West Chester, Pa., was busy bumping up his 1999 forecasts yesterday. He had expected the national economy to slow, dragging Maryland down with it. It didn't.
"The surprisingly strong economy continues to astonish me," Zandi said. "It's amazingly resilient to all of the bad things that have happened overseas."
Maryland, Zandi added, "is enjoying strong real-estate markets, a burgeoning high-tech sector, strong transportation activity. It mirrors what is going on coast to coast."
Maryland is doing especially well in computer services, biotech and other high-tech jobs in the Baltimore-Washington corridor, analysts said. Its construction companies are booming, and a slew of new distribution centers along Interstate 95 have also boosted growth.
Only a few months ago, many analysts worried that economic turmoil in Asia and, more recently, in Latin America would slow U.S. growth and strike manufacturing especially hard.
"Right now, it looks like we've moved beyond all that," said Michael Funk, an economist with the Regional Economic Studies Institute at Towson University. "Ninety-eight looks like its going to end up strong, and I think it's going to carry through right into '99."
Funk, too, is nudging his 1999 forecasts upward. RESI had called for a 1.8 percent Maryland job growth this year. Now, he said, "I think we're going to go back to being over 2 percent," which would add 46,000 jobs this year.
Manufacturing is still deemed to be vulnerable in the United States, though recent reports indicate manufacturers are holding up better than expected.
Even so, "the Maryland economy has a very small manufacturing base, so the problems of steel and other manufacturing industries that are getting hammered by a flood of foreign imports are not a big, overall problem for Maryland," said McMillion.
A strong dollar and weak foreign currencies have made overseas goods tantalizingly cheap for American consumers. At the same time, they have made U.S.-made products very expensive to export.
As Maryland's unemployment rate gets closer to zero, companies and government agencies are increasingly having trouble filling job openings.
"That's your No. 1 problem," said Zandi. "If you ask businesses what's their most important problem, it's finding qualified employees. If you're an employer, it's getting tougher. If you're an employee, it's getting better."
By many accounts, continued prosperity for Maryland and the country depends largely on the stock market and interest rates. Mortgage rates below 7 percent have fueled residential and commercial building alike, and the rich stock market has fueled a surge in consumer spending.
Rising rates or falling stocks could end the party, analysts said.
But for now, said Funk, "it's definitely a job-seekers' market."
Pub Date: 2/06/99