- The Enterprise
- The Recorder
The past year has been a mixed bag economically for Charles County, with the local housing market on the rebound and county employment reeling due to federal sequestration, a leading Baltimore economist told more than 175 business and community leaders Tuesday at the county’s ninth annual Economic Development Summit at the Jaycees center in Waldorf.
Returning guest speaker Sage Policy Group Chairman and CEO Anirban Basu shifted seamlessly between lecture and stand-up routine while breaking down global, national and local economic trends, accomplishing the difficult task of making economics entertaining.
“This is the best part of our summit every year,” Charles County commissioners’ President Candice Quinn Kelly (D) said after Basu wrapped up his hour-long presentation.
The economic data during the past year has been both sobering and encouraging for Charles County. The real estate market is on the rise, with the local inventory of homes down from a seven-month supply in September 2012 to a 4.7-month supply last month, Basu said.
“This means there are probably actually more buyers chasing homes than there are homes for sale,” he said.
At the same time, the number of county residents with a job has fallen since federal budget cuts known as sequestration took effect in the spring.
While the state added more than 43,000 jobs between August 2012 and August 2013, and the Baltimore and Washington, D.C., regions added more than 23,000 and 33,000 jobs, respectively, the region covering Prince George’s, Charles and Calvert counties has lost 4,000 jobs during the same span, indicating that the region was hit harder by the effects of sequestration than others areas of the state, Basu said.
Overall, Charles ranked ninth in the state with a 6.4 percent unemployment rate in August, higher than Calvert County at 6 percent and St. Mary’s County with 6.3 percent. Generally, unemployment rates in Maryland climb the further you get from federal jobs, meaning higher rates exist on the Eastern Shore, he said.
Domestically, the United States is now in its fifth year of economic recovery, averaging about 2 percent growth since June 2009, Basu said.
“For some people it doesn’t feel like that,” he said. “The data are what the data are. Four years in the books, we have begun our fifth year of economic recovery. True enough, the pace of recovery falls far short of where we were in the mid-2000s, and especially far short of where we were in the late 1990s. The late 1990s were glorious.”
Though the economy has been growing steadily since June 2009, there are troubling indicators, such as the prevalence of part-time employment, a 25-year stagnation of median household income and a 35-year low in the rate of participation in the labor market, Basu said.
Since 2007, the nation has lost 5.4 million full-time jobs and gained 3.25 million part-time jobs, a phenomenon Basu attributed to the to the Affordable Care Act, the federal health care reform law known as “Obamacare.” The law has spurred employers to cut down on their health care costs by trimming full-time workers from their payroll, he said.
Also, it’s difficult to model and predict citizens’ confidence in the economy, Basu said.
“Just in a few months, we’ll be going through this debt ceiling and federal government shutdown issue,” he said. “Now, they already shut down the federal government, and that’s fine because the politics don’t work. They don’t make sense. The people who drove that process didn’t win this politically, so they don’t want to probably do it again, but we don’t know. Washington, D.C., is unpredictable.”
Basu began his presentation with a look at the global economy and said it’s on the mend with four straight years of slow-and-steady expansion.
“Things are getting better. They are,” he said.
He showed a chart of the world’s fastest- and slowest-growing economies, with South Sudan listed as by far the world’s fastest-growing nation.
“Fabulous vacation destination, though I’m sure many of you will tell me, Anirban, been there, done that,” Basu quipped, the first of several times he drew laughs.
Meanwhile, the chart showed Libya as one of the world’s sagging economies.
“That would be another excellent place to visit, as there is nothing quite like a moonlight stroll in Benghazi,” he said.
Basu said the list of fastest-growing economies tended to be in Africa and Central Asia because that is where production of natural resources and raw materials is increasing the most. Conversely, the sluggish economies were primarily located in Europe, which has been dealing with the Eurozone crisis since late 2009.
“One of the things in which we Americans take great pride is the fact that we’re not worst. As it turns out, one of the keys to happiness is always to have somebody you can look down on, and for us that would be the Europeans,” Basu joked. “We like to see our superior performance economically vis-a-vis the Europeans to a number of different factors: our more flexible labor markets; our greater propensity for entrepreneurship and innovation; our superior higher educational institutions, including many in this region of the country; the fact that we’re better looking because the Europeans are largely inbred.”
The U.S. has accumulated sovereign debt in recent years, just like several European nations, but without having to face the same threats of default as governments across the Atlantic. Instead, the nation’s bond and equity markets are quite healthy, Basu said, noting that the Dow Jones New York Stock Exchange average had just opened higher than it closed Monday.
“You are richer now than you were seven minutes ago. That’s how good this presentation has been,” he said.
Basu said the disparity between tepid economic growth and the stock market’s “breathtakingly good” performance partially might be due to the Federal Reserve Bank pumping much of the debt it’s accumulated back into the economy. He displayed a slide showing the fed’s balance sheet on one side, and on the other the Standard and Poor’s 500 index moving “in lockstep” since 2009.
“Take away some of that engineering, and maybe you take away some of these gains,” Basu said.
At the same time, corporate profits as a share of gross domestic product are at their highest since the 1920s, “so this hasn’t been completely engineered. Some of this is fundamental, driven by fundamentals, driven by corporate profits,” he said.
Basu then showed a map of the states indicating none are currently in recession, with the only state in “risk of recession” being Delaware.
“It’s been basically downhill for them ever since” becoming the first state to ratify the U.S. Constitution, Basu said.
The map also showed seven states with “emerging” economies — Texas, Alaska, Utah, Oklahoma, Nebraska, North Dakota and South Dakota — and the remaining states as “recovering.”
Basu said it wasn’t a coincidence that the seven “emerging” states have economies centered on oil or natural gas production, adding that the International Energy Agency expects the U.S. to become the world’s leading oil producer by 2020, and energy independent by 2035.
“It’s a game changer, for the entire world, not just us,” he said. “Think about how liberating this is for Americans, what this means for job creation, energy prices, stability, security, so on and so forth. Massive.”
Basu said American corporations have been bringing manufacturing jobs back from overseas since the recession ended, and California, Ohio and North Carolina are the three states to benefit the most thus far from “reshoring.”
“I’d love to see more of that happen here in Southern Maryland, by the way,” he said. “There’s a can-do ready workforce that can do that work.”