The Maryland Economy

Maryland's economy has performed better over the past three years than the rest of the 1990s by any measure.
Employment growth was over 2.5% for each of the last three years, unemployment hit an all-time low of 3.5% in
1999, and personal income growth averaged over 6%. In some respects, 2000 is more of the same, with
unemployment bottoming out at 3.0% in February and March before rising to 3.5% in August. Even better news
is that in 1999 Maryland once again outperformed the U.S. economy. Marginally higher job growth,
unemployment of 3.5% compared to 4.2% nationally, and personal income growth of 6.1% compared to the
national figure of 5.4% indicate that Maryland has one of the better-performing economies in the country.

Cumulative Growth in Population and Employment

Source U S Department of Commerce, Bureau of Census and Bureau of Economic Analysis.

Maryland will not escape the coming slowdown, however. Higher fuel prices and interest rates and a volatile,
stagnant stock market will bring Maryland growth from outstanding to merely respectable. Overall non-
agricultural employment will slow from 2.8% in 2000 to 1.5% in 2001, before rebounding slightly in 2002.
Government-sector employment is no longer a drag on the State's economy, and manufacturing employment will
stop its long-term decline. While growth in the finance, insurance and real estate sector will slow dramatically in
2000 and 2001, construction and service employment will remain strong. Personal income growth will be
sustained by a continuing tight labor market, falling only slightly from 6.6% in 2000 to 6.4% in 2001, then
dropping slightly more to 5.9% in 2002.

Government employment has long been an important factor in Maryland's economy. Growth in the
government sector in Maryland from 1982 to 1999 was 0.6% annually, compared to total employment growth in
the State of 2.1% annually. Recent performance, however, has been more robust, averaging over 2% the last two
years. The outlook for government employment may well be stronger than it has been at any point since the
1980's. The federal, State, and many county governments have sizeable surpluses. It is clear that the relative
restraint in federal spending in the mid-1990's is over. The one clear downside in the federal sector is one that
was entirely expected. With the completion of the 2000 Census, particularly the data-gathering work, roughly
2,500 full-time equivalent positions will be lost from the headquarters of that operation in Suitland and around
the State. State and local government employment will continue to grow. There is currently a shortage of
teachers in many parts of the State, but the enactment of legislation providing for bonuses, tax credits and low-
cost mortgages for teachers may alleviate that shortage.

18 COMPTROLLER OF MARYLAND