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Numerous indicators point to an economic recovery — albeit a fragile one — in Maryland and the rest of the nation.
The state's unemployment rate has fallen for three consecutive months since reaching a 27-year peak of 7.7 percent in March. Maryland employers added about 40,000 jobs from January to June, following losses in the same period in 2008 and 2009.
Yet there are trends that lead some economists to predict a dreaded "double-dip" recession — a second downturn that follows a brief recovery. The Dow has declined since rising above 11,000 in April. Retail sales nationally dropped in June and May from the previous months, though they are still up from last year. Housing foreclosure filings are up this year. Consumer confidence has dropped. Hiring has slowed. The $787 billion federal stimulus package is about spent.
The Business Gazette surveyed economists and business executives in November on their thoughts about whether the recession was really over. This week, we again surveyed Maryland executives and economists to get their latest takes on the economy.
-Kathleen Snyder, CEO of the Maryland Chamber of Commerce:
"Maryland is coming out of the recession faster. We have the advantage of being located next to the nation's capital and have connections to federal business. We're still seeing stress on the economy in commercial real estate and the amount of capital coming out of Capitol Hill. Nobody quite knows the impact of what's happening overseas with their deficits. There's a big question mark on how much more spending we can do at any level of government.
"I am cautiously optimistic 2011 should be a better year, but there's still going to be a lot of pain to be had."
-Stephen Fuller, professor of public policy and regional development, director of the Center for Regional Analysis, George Mason University, Fairfax, Va.:
"I am not worried about a double dip. What has happened is that the third quarter and fourth quarter are just going to be slower, probably around 2.5 percent growth rate over the second half of the year compared to probably about a 3.5 percent growth rate during the first half of the year. So the economy is definitely slowing down nationally. There is always a probability that it could stumble, but it's a low probability. There are lots of things that have slowed down — the housing market, auto sales. Financing is still difficult. The European economy isn't so strong, but it's growing. Manufacturing is growing but not as fast. ... And the effects of the stimulus are wearing thin now. ... This is going to extend into 2011. It will be a very long, slow recovery, and unemployment will not come down as fast as it had been projected."
-Peter Morici, business professor, University of Maryland, College Park:
"The economic recovery is flagging. Retails sales are sinking, private jobs creation, after a brief jolt in the first quarter, is tailing off, and big non-financial companies, sitting on nearly $2 trillion in cash, lack confidence to invest or hire new workers. ... There is a 50 percent chance of a ‘double-dip' recession."
-Georgette "Gigi" Godwin, CEO of the Montgomery County Chamber of Commerce:
"What we're seeing is a lot of optimism among our members. Montgomery County is the No. 2 in the country for small businesses that do business with the federal government. Our businesses are well-positioned to meet those needs. Another thing I think is critical that has evolved is the greening of the procurement practices. Not only are we seeing government buying green but we see large corporations putting it into practice. The companies that are thriving are the ones that had a clear strategy all along and are capitalizing on the opportunities that are coming."
-Larry Letow, chairman of the Tech Council of Maryland and president and COO of Convergence Technology Consulting in Annapolis:
"One of the biggest indicators of health in the [information technology] and biotech sectors has always been the flow of dollars. I don't think we're on the way up, but we're not on the way down. What we're seeing now is strides toward the rise. ... People don't know where there's money to get. The IT side tends to recover faster since they are more dynamic. I think in the long run, the slower the climb, the better off we'll be. ... My company has openings, but we haven't found the right people yet."
-Alan Wilson, chairman and CEO of spice maker McCormick & Co. of Sparks:
"While we are seeing some encouraging signs in the economy, the recovery will be fragile until we see job growth."
-Patrick Donoho, president, Maryland Retailers Association:
"We don't know whether it's over or not. Our guys are cautiously optimistic. ... When they see a quarter with steady sales growth, they will feel better about it. They're not going to add people until they see a steady trend. ... The last thing they want is to lay people off."
-James N. Plamondon, co-president of The Plamondon Cos. in Frederick and chairman of the Restaurant Association of Maryland:
"The economy is still very soft and we're seeing that in our restaurants and hotels. Sales are doing OK but not as well as we'd like. ... Until unemployment improves things will continue to be sluggish."
-Dominick Murray, deputy secretary, Maryland Department of Business and Economic Development:
"My sense is here in Maryland we are doing way better than our neighbors and elsewhere in the country. Since January we have added 40,200 jobs, which is the best of any January-to-June time period in the last 14 years. There are good indicators that the private sector is recovering nicely. ... I think we've looked better than others have feared."
-Steve Meszaros, board president, Maryland Association of Realtors:
"The market has slowed since the [homebuyer] tax credit expired, and I believe until the job market becomes more stable it will remain so. [The Pentagon's Base Realignment and Closure program] will be a big help for Maryland."
-J. Scott Wilfong, board chairman, Maryland Bankers Association:
"Loan demand is really sluggish. Unemployment is still high. Consumer confidence is lagging. ... But there are some glimmers of hope to get the economy rallying again."
-Juli Anne Callis, president and CEO, National Institutes of Health Federal Credit Union, Rockville:
"The confidence of the American consumer is down at this point. The confidence of the consumer is significantly hampering the recovery. ... It's hurting areas such as auto loans."
-Scott Selle, president, Fairchild Controls, an aerospace manufacturing company in Frederick:
"I don't think the recession is over. I believe many of the factors that caused the recession have been mitigated, but residual caution in our commercial markets still exists, and we are facing reduced military demand because of tighter national budgets resulting from the deficit spending by our nation and other governments that was necessary to jump start the world economy. Accordingly, we are replacing employees, but not hiring new positions."
-Gene L. Burner, president, Manufacturers' Alliance of Maryland:
"I'm not an economist. ... I think [the recession] really only applies to the person it affects. ... It depends on your industry segment. I think it's oversimplifying to say, ‘The recession is over' or ‘No, it's not.' ... One thing people can agree on is it's difficult times. It's going to impact everybody differently."
-Gene M. Ransom III, CEO of the Maryland State Medical Society, Baltimore:
"We are seeing some positive signs that things are getting better, but we're seeing elective procedures are still well behind what they were before the recession. Physicians are still concerned about the upcoming 21 percent rate cut, but that's been tabled until the end of the year. People will always need physicians so for us it never gets as good as it gets, but it never gets as bad as it gets."
-Jorge Restrepo, CEO of EurekaFacts, a marketing analysis company in Rockville:
"In our case, we are at 100 percent growth this year. We haven't sought financing aggressively in the past couple years, but we looked carefully at how we structured our approach to cash management. That's a big concern among the Hispanic community.... We added four positions. There's a very big entrepreneurial spirit in the Hispanic community. When the economy is tough, people re-evaluate. ... If the economy lost 6 percent of its dollars, the other 94 percent is still there. There may be a lot of depressing news, but if you focus on the positive and search for the opportunities, they are out there."
-Janice Frey-Angel, CEO of Melwood, an Upper Marlboro nonprofit that supports people with disabilities:
"We came out of this year's General Assembly without a cut and felt much more heard as far as impact. I know fundraising is still being impacted, but we're managing it and took measures to reorganize the way we do business ... We're having a drop in the vehicle donations, but the amo unt we're getting for each vehicle is more than we normally get. We've been able to bring people back to work, but there's uncertainty. I don't feel like I could give raises or anything since I don't know what it's going to be like next year."
-Anthony A. Keder, lawyer in Suitland:
"Our income is down. Clients come and talk about possibly hiring you and then don't. Or the ones that do have trouble coming up with the balance. We haven't seen any improvement for the past year. The only cases not affected are the personal injury contingent. Anything where the client has to pay is down."
-David S. Block, CEO of Baltimore biotech Gliknik:
"Overall, things are still pretty rough. There's very little risk-taking on the part of venture capitalists, which are looking for late-stage products that require a relatively low capital infusion, especially in therapeutics ... We've been able to break the mold a little bit. The biotech tax credit, which was created in the [federal] health care [reform] legislation to spur continued novel discovery work in small biotechs, has generated interest ... But financing will continue to be a challenge for the next foreseeable future."
-Fred Rosenthal, president of Jasper's Restaurant Group, with locations in Greenbelt, Crofton, Largo and Prince Frederick:
"We may have seen the end of the recession, but small businesses have not seen the end of the downturn. ... People are still scared to spend anywhere near where they were before for luxuries. Our stores are getting better but last year was our worst in 40 years. ... Things are a little better but we're probably a year away from seeing it get any real better."
By the numbers
Business bankruptcy filings in Maryland through May of this year were down 5.1 percent from the same time in 2009, from 453 to 430, according to U.S. Bankruptcy Court data. The percentage of Chapter 7 liquidation filings fell to 69.1 percent this year from 76.6 percent a year earlier, with more filings for Chapter 11 protection and reorganization this year. There were 913 total business filings in the state last year, up from 300 in 2006.
Through the first six months of the year, Maryland's foreclosure rate was up 56.2 percent from the first half of 2009, but down 6.2 percent from the last half of 2009, according to RealtyTrac of Irvine, Calif. The state had the 13th highest rate in the U.S. from January through June.
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