#MACoCon Recap: The State of Maryland’s Economy

Maryland’s economy is growing slightly, but mounting uncertainty around affordability, labor, and federal policy is reshaping what that growth really means for counties and communities.

At MACo’s Winter Conference, economist Dr. Daraius Irani delivered a sobering but practical economic outlook during “Troubling Trends: The State of Maryland’s Economy,” offering county leaders a clear-eyed assessment of the forces shaping budgets and long-term planning decisions across the state.

Amid growing uncertainty, Dr. Irani opened with a national snapshot that revealed a mixed economic picture. While US GDP grew by 3.8 percent in the second quarter of 2025, that growth masked underlying weaknesses, including declining investment, soft government spending, and rising policy uncertainty. Inflation remains well above the Federal Reserve’s target, with housing, rent, and transportation costs continuing to outpace broader price growth, placing sustained pressure on household budgets and local service demand.

Labor market conditions, while still relatively strong, show signs of strain. National unemployment and underemployment have ticked up slightly, and labor force participation remains below pre-pandemic levels. Dr. Irani highlighted the growing importance and role of immigrants in sustaining the workforce, noting that immigrants now account for a record share of the US labor force. At the same time, proposed federal immigration restrictions and mass deportation policies could further tighten labor markets, raise costs in key sectors such as construction, healthcare, and hospitality, and complicate workforce development strategies at the local level.

Housing emerged as one of the most pressing economic challenges. The U.S. is currently short an estimated 2 to 6 million homes, and housing starts have declined since peaking in 2022. Rising construction costs, limited inventory, and higher mortgage rates have pushed affordability further out of reach for many residents. In Maryland’s major metro areas, median-income households can afford less than half of available housing, a dynamic that directly affects population trends, workforce retention, and county service needs.

Turning specifically to Maryland, Dr. Irani noted that the state’s real GDP grew by 1.4 percent in the second quarter, trailing national growth and reflecting the state’s heavy reliance on federal employment and spending. Government and healthcare remain Maryland’s largest employment sectors, and counties with high concentrations of federal workers are particularly exposed to federal budget cuts, shutdowns, and workforce reductions. During the most recent federal shutdown, Maryland saw a sharp surge in federal unemployment insurance claims, underscoring the immediate ripple effects on local economies and safety net programs.

Moderated by Delegate Lily Qi, the session reinforced the critical role counties play in navigating economic volatility. From budgeting and workforce planning to service delivery, Dr. Irani emphasized that local leaders must plan for uncertainty while remaining nimble and data-driven. The takeaway for county officials was clear: understanding these economic trends is essential to protecting residents, sustaining local economies, and positioning Maryland for long-term resilience in an increasingly unpredictable landscape.

Title: Troubling Trends: The State of Maryland’s Economy

Speaker: Daraius Irani, Ph. D., Vice President, Strategic Partnerships & Applied Research, Towson University; Chief Economist, Regional Economic Studies Institute (RESI), Towson University

Moderator: The Honorable Lily Qi, Maryland House of Delegates

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