It?s a good-news, bad-news story for the national economy in 2008, according to one of the nation?s top economists, who said Maryland will be spared the worst of the downturn and has the ingredients necessary for long-term success.
The national economy is fragile and balanced at the edge of a recession, Knight Kiplinger, editor in chief of Kiplinger?s Personal Finance Magazine and Kiplinger.com, told area bankers and business leaders at the inaugural First Friday Economic Outlook Forum.
However, Kiplinger said he believes the national economy would avoid a recession, and that Maryland would weather the next year better than the rest of the nation.
“The economy is in a precarious balance, one that could easily tip into recession. If dealt with confidently, and aided by a little good luck, it probably won?t,” he said.
He described the outlook for the coming year as “a giant good-news, bad-news joke.” The bad news, he said, includes continued housing woes, high energy prices and job cutbacks by local governments.
But Kiplinger and other experts at the forum said labor and employment numbers nationwide remain strong, and Maryland benefits from a strong base of high-tech jobs.
“People are still working, which means they?re still spending, which means no recession for Maryland in 2008,” said Anirban Basu, CEO of Sage Policy Group.
“A lot of people like to suggest that Maryland follows different economic rules from the rest of the country,” he said. “Our consumers are every bit as much affected by the forces that affect the American consumer, namely $3 gas and adjustable-rate mortgages. And they face some factors that others don?t, like a sales tax increase … [and] a tax increase on the highest earners.”
Kiplinger predicted the Baltimore-Washington metro area would see growth of a full percent or more, slightly ahead of his forecast for the nation. Across the United States, he said, retailers would struggle to increase sales by 2 percent, but U.S. exports would increase by 9 percent, and employment would remain high.
“The housing market is a feel-bad story, but the stability of the labor markets is the feel-good story,” said Gary D. Keith, a vice president and regional economist for M&T Bank.
Keith said the housing market?s downturn isn?t the only factor that will determine the nation?s economic outlook in 2008, just the one many economists focus on.
“It seems to be the national pastime right now, to talk ourselves into thinking the economy is worse than it really is,” he said.
Staff Writer Andrew Cannarsa contributed to this story.
