Maryland Sees Improvement in Jobs Picture

… Economists think 2012 could be a bit better than 2011 …

By Jamie Smith Hopkins, The Baltimore Sun

9:53 PM EST, December 20, 2011

Maryland’s employment picture continued to improve in November, and local economists are hopeful that 2012 will be an improvement over this year — but they aren’t expecting much.

Several economists predicted only slightly better job growth next year than this year, which saw “anemic” increases, said Richard Clinch, director of economic research at the University of Baltimore’s Jacob France Institute. About 207,000 Marylanders remain unemployed, nearly 100,000 more than when the last recession begin in late 2007 — leaving a lot of ground still to make up.

Most of the year’s gains were made in recent months, despite the looming possibility of federal cutbacks in a state fueled by government spending. The state has now had three straight months of job growth, including 2,000 positions added in November, the U.S. Department of Labor estimated Tuesday. And unemployment dropped below 7 percent for the first time since May.

“Maryland’s clearly seeing some forward momentum,” said Gary D. Keith, regional economist at M&T Bank. “I wish it was better, but … one foot in front of the other.”

The  nationwide drop in unemployment in November was propelled in part by job seekers simply giving up. But Maryland saw an increase in its labor force — people working or looking for work — and Labor Department figures showed that about 9,500 fewer residents were unemployed than in October.

Those figures, produced separately from the job estimates, include Marylanders working in Washington and other spots outside the state.

With government agencies cutting back, the private sector in Maryland is driving job increases. Growth in November would have been higher if not for a 2,300-job cut in government, the Labor Department estimated.

Most of the major private sectors added jobs, including education and health services, hospitality and construction, but some pulled back in November. Manufacturing and the professional and business services sector — heavy with government contractors — each shed 1,500 jobs, according to the estimates.

The figures, which are preliminary, are adjusted to try to account for normal seasonal changes in hiring and layoffs.

All told, Maryland employers have added nearly 22,000 jobs between January and November this year, according to estimates that could later be revised.

Clinch, with the University of Baltimore, expects about 20,000 to 25,000 more jobs next year. Andy Bauer, regional economist for the Federal Reserve Bank of Richmond’s Baltimore office, is forecasting about 25,000. And Daraius Irani, director of the Regional Economic Studies Institute at Towson University, is predicting about 27,000.

But Moody’s Analytics, part of the New York-based Moody’s Corp., is much less optimistic. It predicts that Maryland’s job base will increase by just 7,000 next year.

“Not very strong growth at all, but at least kind of staying afloat,” said James Bohnaker, a Moody’s Analytics associate economist. “Government is the major drag there, at the federal level as well as state and local. And then you have all these other sectors of the economy that are directly related to government spending, things like business and professional services, which includes all your defense contractors.”

Economists note that much is uncertain, from the extent of government cuts to how debt problems in Europe might ripple outward.

“I think most folks that are making these projections are using a pencil with a big eraser on it,” said M&T Bank’s Keith. “There’s a lot of balls in the air relative to what we typically look at when we forecast.”

How the federal government will change its spending patterns to deal with a sky-high deficit is the big wild card for Maryland. The state has long benefited from its location next to D.C. The sharp recession from the end of 2007 through the middle of 2009 wasn’t as bad in Maryland as it was nationwide because of the Uncle Sam effect, Clinch said.

He calculated that total federal spending in Maryland more than doubled during the last decade, with procurement alone — dollars flowing to businesses for goods and services — rising about 150 percent. Such go-go days are gone, Clinch said.

“The engine that’s driving Maryland is going into idle,” he said, adding, “It’s not a doomsday scenario of job losses and a new recession; it’s simply a period of slower growth.”

He suspects the state will produce at least as many jobs next year as it has this year because the national economy — and thus the state’s — was weighed down by many significant problems in the first half of 2011. The international economic impact of the Japanese tsunami was just one, inch said.

State officials are hoping that federal cutbacks, when they hit, will target areas that Maryland doesn’t specialize in while sparing intelligence, defense IT and other programs that employ tens of thousands here. Irani, with Towson University, sees the possibility that cybersecurity — a relatively new focus for the federal government — could help offset some losses. The U.S. Cyber Command is based at Fort Meade.

Maryland businesses started the year full of optimism about their prospects — hopes that were dashed as the state and national recovery sputtered. Bauer said a Federal Reserve survey of Maryland companies early in 2011 showed more than 50 percent of businesses expected growth over the following six months, a figure cut in half by the early fall.

The December survey looks better, Bauer said. But expectations haven’t fully rebounded. About 35 percent of Maryland companies surveyed think they’ll see business increase over the next six months, he said.

“The expectations for next year are more moderate than what they thought this year was going to be,” Bauer said. “A lot of businesses we’ve talked to … don’t expect things will improve enough to the point that they’re looking to hire.”

Copyright © 2011, The Baltimore Sun

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