Local economist Anirban Basu addressed the state of the economy with Howard County's business leaders Friday morning, painting a gloomy picture with a few bright spots that came as no surprise to the leaders.
"Howard County (is the) least worst, and least worse of course is the new excellent," Basu told the crowd at the Howard County Chamber of Commerce economic forecast breakfast, held Dec. 16 at the Columbia Sheraton.
Basu, founder, chairman and CEO of the Baltimore-based economic and policy consulting firm Sage Policy Group Inc., said most parts of the country are out of the recession that plagued every state in 2009 and well on the road to recovery. But there's still a long way to go, he said.
"We've not recovered in terms of financial markets, we've not recovered in terms of jobs and we've not recovered in terms of industrial production," Basu said.
Last year, Basu forecast that the economy would grow by 2.7 percent in 2011. But Friday he said actual growth will come in between 1.4 percent and 1.8 percent.
So what happened?
"By March, a soft patch had taken hold of the economy," Basu said. Gas prices, he said, "zapped the consumer of much of their spending power. … Not only was it gas prices, but it was food prices as well."
This summer's natural disaster in Japan and man-made disaster in Washington didn't help either, Basu said. Congress failed to solve the country's debt ceiling issue, he explained, despite imposing cuts in time to avoid the Aug. 2 deadline for default.
"A lot of the weakness this summer in the economy was human-made, and it was imported from Washington, D.C.," Basu said.
One area of the economy that is not recovering fast enough is the job market. The country has 6.3 million fewer jobs than it had in December of 2007, Basu said. And unless the United States finds a way to speed up job growth, it is projected to take until 2017 to return to 2007 levels of employment.
Maryland, Basu said, has added 10,000 jobs over the last year, but that growth is "at one-third of the pace of the country."
More problematic for Howard County, he said, is that the Washington metropolitan region, which is largely tied to federal government employment, has only added 5,600 jobs in the past year. Basu said the shrinking of the government sector is not good for income growth or the housing market in the area.
While unemployment in Howard County is the lowest in the state — 5.1 percent as of October — it is still high compared to historical standards, Basu said. Throughout the 1990s and the early half of the 2000s, Howard's unemployment rate always came in under 4 percent.
The good news is that the impact in Howard County of growing cyber security industry in and around Fort Meade "will continue to be very, very positive," Basu said.
Basu also addressed the housing market, which is lagging behind other sectors of the economy in terms of recovery.
In Howard County, he said, the number of building permits issued are down 17.3 percent, compared to 10.9 percent statewide.
Median home sale prices in Howard County are also down over the past few months, Basu said. While that's bad for the sellers, he noted good news for buyers in that mortgage rates are at a historic low.
Looking to next year, Basu forecast that a 2 percent growth in the nation's economy for 2012.
"The U.S. economy cannot really take off unless the housing market participates, and right now, it's not," he said.
After Basu's presentation, Trent Gladstone, a Columbia real estate agent, said "his comments showed some promise for the future."
Gladstone also noted that Basu affirmed what he already knew: It's a good time to buy a house.
"I think the encouragement is you don't want to miss this window; we're in a really good window to buy," Gladstone said.
Chamber of Commerce board member Miles Coffman, who works as a commercial lender, said Basu's comments represent "what we've been seeing in the marketplace." He said it's no surprise that 2012 is expected to look a lot like 2011.
With that in mind, Coffman added: "We're fortunate to be in Howard County."