5 indicators to watch in the region’s economy

By V. Dion Haynes,

The deficit reduction agreement, the Standard & Poor’s downgrade of the nation’s credit rating and the tumult on Wall Street have for many local economy watchers turned what seemed to be a growing recovery into a big question mark. Here is what five experts are saying about the region’s prospects for jobs, construction and a double-dip recession:

Peter Morici, professor at the Robert H. Smith School of Business at the University of Maryland, said he thinks the local economy will be fine for a few years.

“I don’t think we’ll see much change in our condition for two years. Federal spending cuts start in 2013. The job market has tightened up, especially for government employment. I expect we’ll [continue to] see a tight market for federal jobs. But our private sector will do well in areas such as high tech and investment banking. And I don’t see any slack off in demand for lawyers. I think things will continue as they are — with a pretty decent private market and a more difficult government job market.”

Kristie Arslan, president and chief executive of National Association for the Self-Employed, said the credit downgrade will quash growth plans of many small businesses that were starting to dig their way out of the first recession.

“They already have had problems getting access to capital. Now they will be paying more for the money they actually get. They aren’t big businesses with lots of liquidity — every dollar matters. ... A lot of our members were considering growth — they’re in a position to bring on one or more people. Now they’re taking steps backward to maintain their current level of operation in case things get worse.” Moreover, she said, small businesses may see subcontracting opportunities dry up. Large corporations “may freeze spending on consultants and it will have ripple effects in the small business community.”

Renee Winsky, chief executive of the Tech Council of Maryland, said the technology sector in the state is fairly diversifed and should weather the economic upheaval.

“We have a broad base of technology — we’re not all into life-science or dot-com or Internet companies. We have a variety of innovation and that creates jobs and helps the economy grow. Times are tough and the markets are volatile . ... If the federal government ends up cutting back and federal workers get laid off, [there should be jobs in the tech sector to absorb them]. There will be good qualified people to fill the jobs that, hopefully, the private sector will be creating.”

Anirban Basu, chief economist for the Associated Builders and Contractors, a construction trade group, says recent events will hurt his industry.

“The debt ceiling coupled with the market downturn and ongoing fear of another recession have had a chilling effect on the national and regional construction industry and the expectation is construction starts will slow in the months ahead. There had been evidence of an emerging recovery in privately financed construction activities, but the events of recent weeks have undoubtedly persuaded many developers and other investors to postpone their plans. ... The last thing someone wants to do is bring a hotel, office building or shopping center on line in the midst of uncertainty.”

Morris Segall, president of SPG Trend Advisor in Baltimore, says he believes the nation will slip into a double-dip recession, and amid cuts in federal spending, will pull the region into it.

Already businesses have been “laid back and deferred hiring.” If the economy worsens, “they may retrench further. The next step is not just not hiring — it’s laying off. The economy will head back into a recession if employment and consumer spending stay weak. ... The July data were sufficiently bearish for us to raise the possibility of a double-dip recession. We’re not there yet. But [to avoid another recession], economic data has to get better fast.”