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Economic news not all bad

Consultant speaks at Hagerstown summit

Consultant speaks at Hagerstown summit

November 14, 2007|By JOSHUA BOWMAN

HAGERSTOWN ? There's not a lot to smile about in the economy these days, according to economic consultant Anirban Basu, who spoke Wednesday night at the Four Points Sheraton.

"I've got bad news and good news," Basu said. "The latter part is very short."

Basu, the chairman and CEO of Sage Policy Group, a Baltimore economic and consulting firm, delivered the keynote speech during the Fifth Annual Washington County Economic Summit.

For a crowd of about 200 local business and civic leaders, Basu talked about current economic trends and what he thinks they will mean for the country, state and county.

Whipping through slides on unemployment, trade and consumer confidence, Basu made predictions about spending, housing and the possibility of recession.

He said the housing market will not recover until 2010, when "people feel good about selling their homes again."

"It's going to take a psychological shift," Basu said. "And I don't see that happening next year or the year after."

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However, Basu said Washington County is in a better position than many other Maryland counties because it does not have as much surplus housing and the rise in house prices was not as severe as in other parts of the state.

He argued that when the market recovers, buyers from the Washington, D.C., metro area will again return to Washington County.

"You drive until you qualify for a loan," Basu joked.

The economy as a whole is suffering as the subprime mortgage industry falters, consumers go further into debt and the country's trade deficit continues to rise, Basu said.

He predicted that the United States faces a 20 percent to 40 percent chance of falling into recession in 2008.

"But, if you're feeling optimistic, there's something for you, too," Basu quipped.

He noted that the country's Gross Domestic Product is growing at an above-average rate and said consumer spending accounts for more than half of that growth.

He also said nonresidential construction has been "as hot as residential construction has been cold," and described corporate profits as "terrific."

The unemployment rate also is relatively low, Basu said. He said Washington County has added 3,300 jobs in the last five years.

He said the greatest risks for the economy are the price of oil, the value of the dollar and the subprime housing market.

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