Towson University’s Outreach Blog

Thomas

One of RESI-AEHS’s constant projects is to analyze and forecast the Maryland economy, specifically employment.  Lately, as you may be aware, the national economy has not performed well.  The latest available national unemployment rate in November was 10%, 3.2 percentage points higher than the rate posted in November 2008.  In the week ending Nov. 28^th, the preliminary figure for seasonally adjusted initial claims was 457,000, a decrease of 5,000 from the previous week’s revised figure of 462,000, according to the Department of Labor.  Yet, as we hear bad news regarding the national state of employment, Maryland’s performance has been more resilient.

• 7.3% of Marylanders who were actively looking for work were unable to obtain employment as of October.

This percentage is still high compared to October 2008’s unemployment rate of 4.8% and above what is considered the full employment unemployment rate of 3.0% (this is the lowest level of unemployment that can be sustained given the structure of the economy).  However, the 7.3% figure was lower than many States, such as California (12.5%) and Florida (11.2%).  Now, how is it that Maryland can outperform a State like California?

There are a variety of reasons for Maryland’s healthier performance when compared to California and following are two reasons.

• First, fewer people engaged in the rush of gaining profit by investing in the real estate industry.  The rate of foreclosed houses in California for October 2009 was 1 in 156 houses while in Maryland the rate was 1 in 348 houses.  A large number of houses were foreclosed in Maryland, but the number paled in comparison to California.
• Second, the governmental sectors, especially the Federal government sector, have an important presence in Maryland, causing a multiplier effect to other sectors.  In 2008, the government sector was the largest supplier of jobs in Maryland (18.6%).

This leads us to the question of; so what is the forecast of employment in Maryland?  In 2010, Maryland will continue to fare better than the national unemployment rate but not quite as well as in 2008 (In 2008, the Maryland unemployment rate averaged 4.4%).  The Maryland unemployment rate should decrease to the 2008 level in the year 2013 according to our forecast.