The worst might be over for Maryland's economy, but don't expect business as usual for a long time.

That's the picture that emerges from interviews with executives and analysts with broad regional views.

"There's a lot of sadness out there," says Fred Glose, chairman of Maryland Chemical Co., which distributes to a variety of industries from its warehouse in Baltimore's Fairfield section. "The money flow is the main stumbling block for our potential customers. People perhaps can't borrow money for whatever they want to do."

A year ago I contacted that business and others to gauge Maryland's economy after Wall Street had crashed and soothsayers had proclaimed that, yes, it really was a recession. I called back this week to see how the businesses had fared, how 2010 looks and how accurate the mild pessimism in the December 2008 column turned out to be.

Everybody survived. But for some, this year turned out to be worse than forecast. Nobody expects a substantial recovery until 2011 at the earliest.

"It was definitely not the year we would have liked," says Jim Meade, director of permanent placement for the Baltimore office of Robert Half International, a staffing company for accountants and financial managers.

Even so, Maryland merchants expect their first holiday-sales increase this year since 2006. Some companies are thinking about hiring. Stimulus money and other federal spending have kept Maryland better off than most states.

"We think the worst is over," said Tom Saquella, president of the Maryland Retailers Association. "It's got a long way to go. Last year, our members saw the holiday season as half-empty. This year they see it as half-full."

Maryland shopkeepers expect holiday sales to increase 1 percent or 1.5 percent, compared with holiday revenue from last year, Saquella said. That's better than the declines in 2008 and 2007, but it won't come close to returning sales to 2006 levels.

Consumers, who account for more than half of all economic activity, will be key for a recovery. So will bankers, described by many businesses as still stingy with loans.

"We're still seeing a limit in terms of loans from the banks," said Mark Cissell, president of KatzAbosch, a Timonium accounting firm that serves companies in the health care, government contracting, real estate and biotechnology industries. "And, let's face it, that's where people get money to buy equipment or expand inventory." Not to mention hire people.

The overall picture is "encouraging," he said, "but I'm certainly not doing cartwheels."

Others also see a turning point, not a takeoff.

Glose mentioned new orders from road builders with federal stimulus money and a comeback by the Eastern Shore poultry business, whose exports got hurt by a trade dispute. Both helped boost Maryland Chemical's sales by a tenth this year and figure to give the company decent revenue in 2010.

"We're very fortunate," Glose said. Next year, he added, "we're hoping for [another] 10 percent, but we'll be happy with the same as this year."

At Robert Half, Meade sees decent business in health care and federal contracting, two of Maryland's strengths. Real estate and finance are still weak, "but we're starting to see life in them as well," he said.

Even better, some companies are at least talking about switching from temporary help to permanent hires, and some even plan to sell stock, he said.

"We've got a brighter-looking 2010," Meade said. "We've got companies that are beefing up their mergers and acquisitions groups, and that's also a positive sign."

As usual, federal spending and federal employment are keeping Maryland's economy in better shape than most states'.

"If you're employed by the federal government, I think you're going to continue to be safe," says Daraius Irani, director of applied economics at RESI, Towson University's consulting wing.

He's not so sure about employees working for state government, which faces more large budget shortfalls.

"Next year will be the year of some layoffs" by the state, which has trimmed vacant positions but laid off relatively few people, he said. "And, since the state is pushing some of its burden off on the local governments, I think the locals are also going to be making that decision."

Last year's column, which said Maryland was "in relatively good shape" even though it would "have a hard time dodging the employment declines and broad reversals afflicting the nation," was too optimistic. Revised figures showed that the employment declines were already happening.

Maryland unemployment has soared to 7.3 percent. Even though that's substantially below the national jobless rate of 10 percent, it's still double the level from two years ago and the highest point for the state since 1983.

Irani doesn't see the jobless numbers improving much until this time next year.

"In late 2010, I think we'll see the unemployment numbers coming down to perhaps - I don't want to say near-normal - but getting closer to better," he said.

Closer to better. That's our motto for 2010.

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