January 11, 2012
Contact: University Relations
The fourth-quarter Maryland Business Climate Survey, produced by the University of Baltimore's Jacob France Institute in the Merrick School of Business, indicates a long-term settling in of lowered sights and risk aversion—the effects of a multi-year period of economic turmoil both in the United States and abroad. No sector of Maryland's economy has been able to post significant gains during this period, but while some parts of the state, such as the Washington, D.C. suburbs, have borne the brunt of this uncertainty, Maryland as a whole has continued to show marginal economic progress.
The new report looks to be an echo of the business dissatisfaction that came through strongly in the third quarter of 2011. In that report, Congressional gridlock over federal spending and the unfolding crisis in several European economies combined to suppress the slight gains made in Maryland sales and employment.
Now, according to Richard Clinch, director of economic research at the Jacob France Institute, businesses across the state appear to be settling in for a long period of avoiding more problems, by investing cautiously, growing their companies incrementally, and keeping an eye out for new troubles in 2012.
"I would call it 'tempered expectations' in the new year," Clinch said. "The fourth-quarter survey shows that while sales growth is still occurring in one-third of the participating firms, and nearly one-quarter are increasing their employee numbers, there is an ongoing sense that the smart move is to remain very cautious. Businesses seem to be wary of what's next, whether it's falling stocks, budget cuts or issues in the global economy. They've been burned, and it shows."
Still, there are bright spots in the fourth-quarter results, including a slight dip in the number of firms expecting a market contraction in 2012. Most notable is the 40 percent of firms that reported a shortage of workers needed for their companies during that quarter. While that number is three percent lower than what was reported in that category for the third quarter, the number still is significant, according to Clinch.
"While it's frustrating for these businesses to struggle to find the workers they need, it's also a positive sign in terms of potential growth in employment," he said. "It indicates that some additional economic growth could be achieved if these jobs can be filled in 2012. The issue is whether the right workers—properly trained, prepared to work for the wages and benefits offered by these companies, willing to relocate, etc.—can be found and hired. Even in a flat economy like the one we're in now, that can be a real issue."
Clinch added that the fourth quarter results, when set against those of the previous three quarters of 2011, show a Maryland economy that is holding on, struggling in some ways, but not in crisis.
"It indicates that perhaps 2012 will be another year of recovery across the state, although it will be slow and sometimes appear to be heading down again," he said. "It means that if you're a business in Maryland, you can look forward to a slightly brighter picture this year. But be extra careful."
Find the complete Fourth Quarter 2011 Maryland Business Climate Survey results here.
Every quarter, the Maryland Business Climate Survey takes the pulse of the state's economy by surveying 250 Maryland companies, gathering data on employment, sales, the availability of skilled workers, the ability of businesses to compete, and so on. The survey is produced by the non-partisan Jacob France Institute, the economic research arm of UB's Merrick School of Business.
The University of Baltimore is a member of the University System of Maryland and comprises the School of Law, the Yale Gordon College of Arts and Sciences, the College of Public Affairs and the Merrick School of Business.