ANNAPOLIS, Md., Jan. 3, 2024 — The first State of the Economy Report released by Comptroller Brooke E. Lierman provides a comprehensive overview of Maryland’s economic landscape, highlighting strengths and challenges. Based on data analysis and statewide discussions, the report aims to guide policy decisions for Maryland’s future growth.
Comptroller Lierman emphasized Maryland’s robust economy, underpinned by a low unemployment rate of 1.8%, a high median household income of $108,200, and one of the nation’s lowest poverty rates. The state’s diverse industries, federal government presence, and skilled workforce have played a vital role in its economic resilience, particularly during the COVID-19 pandemic.
However, the report also points to national trends adversely affecting Maryland’s workforce and economic recovery, increasing costs, and impacting family settling in the state. Lierman stressed the need for strategic investments and innovative policies to foster long-term prosperity.
The analysis, conducted by the Office of the Comptroller’s Bureau of Revenue Estimates and Policy Division, compared Maryland’s economic indicators with neighboring states and national data. The findings reveal that Maryland’s economic growth has lagged since 2017, with slow recovery post-COVID-19. For instance, Maryland’s real GDP per capita growth since the end of 2016 is only 2.1%, compared to 11.9% nationwide.
Maryland leads in sectors like health care, professional services, and federal government employment, the latter being a key economic driver. In 2022, federal procurement injected $42 billion into Maryland businesses, accounting for 10% of the state’s GDP. Yet, the private sector growth remains stagnant, with employment only 1.0% higher than in late 2016, significantly trailing national and regional growth rates.
A notable issue is the labor shortage, with Maryland’s Labor Participation Rate (LPR) falling from 69.3% in January 2020 to 65.2% in 2023. This decline is especially marked among women aged 16 to 34, with Maryland experiencing a more significant drop in female labor participation than national trends. Factors like high childcare costs, dual-income household dynamics, entrepreneurship, and higher education pursuits are cited as reasons for this trend.
The Brookings Institution’s research links health issues, including mental health and opioid-related challenges, to the decline in LPR and economic growth. Maryland’s opioid crisis mirrors its economic stagnation since 2016.
Maryland’s population dynamics also paint a complex picture. The state witnessed its first population decline since World War II during the pandemic, driven by lower birth rates and an aging population. Domestic migration patterns show people relocating from high-cost to lower-cost living areas, with Maryland experiencing a net outflow to states like North Carolina, South Carolina, Pennsylvania, and Florida.
Housing affordability emerges as a critical issue, with Maryland’s median home price at $411,200 in 2022, significantly higher than the national median of $348,600. This high cost of living is a potential factor in migration trends and challenges in attracting new residents to fill job vacancies.
While not offering policy recommendations, the State of the Economy Report serves as a tool for lawmakers and local leaders to navigate the post-pandemic recovery and strategize for Maryland’s economic future.
