Experts say county will weather recession

Wednesday, Oct. 29, 2008

Click here to enlarge this photo Staff photo by GRETCHEN PHILLIPS Community Bank of Tri-County President Mike Middleton speaks at the economic summit Tuesday. E-Mail This Article | Print This Story

Local business owners weren't surprised at the county's 11th annual economic development summit Tuesday when experts said the economy will get worse before it gets better.

But the speakers were optimistic that Charles County and Maryland are better off than most.

News of lesser damage in the region compared to others nationwide, and a likely boom once consumer confidence rises and business morale improves, couldn't leverage the blow they've taken over the past year and expect to take for months to come.

"It's hard to think that as a business owner, a year from now I'm still going to be struggling," said Lorrie Anderson, owner of Country Florist in Waldorf.

"I don't think anything was really shocking. We all know we have to tie a knot and hang on. But another shock was how full it is," said Southern Maryland Business Center owner Darlene Breck, referring to a packed conference room at the Jaycees center in Waldorf.

Despite pessimism among businesspeople, nearly 300 filled the summit, in which the theme, "Trends and Opportunities in Today's Economy," was meant to highlight ways the county can overcome current economic challenges by taking advantage of diversification and other opportunities to grow.

"The national economy will slow further," Anirban Basu, an economist with Sage Policy Group in Baltimore, told attendees. "The economy will be worse than you think in the next six to nine months. But Charles County is surely not in a recession. My message to [small businesses]: survive, because many of your competitors will not … in the meantime, we're stuck in this equilibrium."

Basu explained how availability of cheap money that began largely after the terrorist attacks of Sept. 11, 2001, resulted in a housing and construction boom that resulted in overwhelming foreclosures and a credit crisis.

"If they were going to give away the money, the American people were going to take it. They were told, ‘If you want to fight terrorists, shop.' When people have too much money how do they spend their last dollar? Not wisely. This is an unusual time. The world is looking for safe havens. This economy has become more global. An incredible amount of wealth has been lost," Basu said.

But in the last few weeks, things have looked up some, despite huge hits recently to the retail and food service industries.

"Where is the consumer in all this? They are 70 percent of the economy. Remarkably, consumer sentiment has been rising, ah-ha! Gas prices," Basu said. "They're thinking, hey, my 401K may be going down but hey, at least my house didn't foreclose, at least not today. But if you're wondering about this holiday shopping season, my guess is that it's going to be miserable."

Basu also touched on the impact of the slumped housing market but noted that Charles and St. Mary's counties are among the top in the state by home sales, though there remains an overstock of homes for sale on the market.

As food and gas prices rose rapidly, Basu noted savings rates among Americans in March were nearly zero and noted a rising unemployment rate, which in Maryland hit 4.6 percent in September. Though it's risen from 3.4 percent in September 2007, Basu and Andy Moser, Maryland assistant secretary for workforce development, said 4.6 percent is still virtually a fully employed workforce.

"All indicators show that Maryland's not invulnerable but it's in pretty good shape," Moser said.

Also at the summit, Maryland Department of Business and Economic Development Secretary David Edgerley spoke about the state's initiatives to invest in financing new businesses and community colleges, and preparing for 60,000 new jobs to come to Fort Meade and Aberdeen with Base Realignment and Closure implementation.

Community Bank of Tri-County President Mike Middleton spoke, with the help of a cartoon slide show, about how community banks remain strong despite financing woes by national corporate institutions affected by the failure of highly complex, bundled mortgage securities on Wall Street.

"Everything is built on the previous transaction" in banking, he said. "Every transaction that you engage in will be more challenging. It's really going to be back to basics. There's way too much fear on Main Street. But we did have way too much greed as well."