Tragedy Strikes Baltimore: Bridge Collapse Shakes the City
The recent collapse of a major bridge, the Francis Scott Key Bridge, resulting in the loss of lives of Hispanic construction workers, has sent shockwaves through the Baltimore community. The devastating incident has left the region in mourning and raised concerns about infrastructure safety.
The recent collapse of the Francis Scott Key Bridge last week, which resulted in the loss of lives of Hispanic construction workers, has deeply shaken the Baltimore region.
As the local community comes together to navigate the challenging process of recovery, experts are optimistic that, at the very least, the local economy will be able to withstand the impact of the bridge collapse.
The economic impact of the collapse will be limited, as Baltimore’s regional economy is strong with low unemployment and inflation rates.
The Port of Baltimore, a crucial economic hub employing many, is currently inactive due to debris in the Patapsco River. Officials are using emergency federal funds to clear the wreckage, allowing for ship traffic and bridge reconstruction. Insurance companies are also assisting with covering costs.
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A temporary alternate water channel will be opening near the collapsed Baltimore bridge. According to Orlie Prince, a senior vice president at Moody's Ratings, Baltimore County and the city have high credit ratings. This indicates that they have strong tax bases that can withstand sudden shocks like this one.
The firm recently analyzed the creditworthiness of local governments, considering factors such as the overall health of the economy. They stated that a successful resumption of port activity in the near future, along with significant federal funding for a new bridge, will help reduce the risk of long-term damage.
Now, let's take a closer look at Baltimore's regional economy and why it is expected to avoid a major economic crisis.
Low unemployment
The Baltimore metropolitan area, which encompasses the nearby cities of Columbia and Towson, registered a low 2.8% unemployment rate in January, according to Labor Department data.
Cargo ship Dali is seen after running into and collapsing the Francis Scott Key Bridge on March 26, in Baltimore, Maryland.
Cargo ship Dali is seen after running into and collapsing the Francis Scott Key Bridge on March 26, in Baltimore, Maryland.
Tasos Katopodis/Getty Images
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Reopening the Port of Baltimore may take several weeks as the massive cleanup of wreckage begins, according to officials. This process is currently underway to ensure the safety and efficiency of the port operations.
The unemployment rate in Baltimore is lower than the national average of 3.9% in February. Ranking 43rd out of 389 regions with more than one million residents, it is also lower than other eastern US cities like Boston, Orlando, and Atlanta, and similar to Washington D.C.'s rate.
The job market in the region is varied, with industries such as health care, education, financial services, and government driving employment opportunities. The Port of Baltimore is another significant contributor to the job market, providing about 19,970 direct jobs, which accounts for 1.4% of total nonfarm employment in the greater metro area, as reported by Moody's analysis.
A crane stands idle above farm equipment on Thursday, March 28, 2024, in Dundalk, Md. The deadly collapse of the historic Francis Scott Key Bridge has shaken Baltimore to its core and challenged its cultural identity as a port city that dates back to before the U.S. declared its independence.
A crane looms over farm equipment in Dundalk, Md on Thursday, March 28, 2024. The collapse of the Francis Scott Key Bridge has deeply impacted Baltimore, questioning its identity as a historic port city that existed even before the U.S. gained independence.
The fate of those jobs is uncertain at the moment, but they are unlikely to be gone for good. The port will reopen eventually, and there are other employers in the area offering similar jobs, making it possible for these workers to find new employment easily if needed.
According to Matt Jaffe, an analyst at Moody’s, even though the port is currently closed for cleanup, there are still opportunities at Tradepoint Atlantic, a private port facility that remains operational. Additionally, companies like Amazon are expanding in the area and accelerating their plans to develop warehouse facilities, providing additional job prospects for workers in the region.
“I think the job market is definitely resilient,” Jaffe said.
Low inflation
The Baltimore metro area is not facing significant challenges with high inflation compared to the rest of the US economy. In February, consumer prices in the region increased by just 1.7% from the previous year. This rate is notably lower than the national average of 3.2% for the same month. According to a CNN analysis, Baltimore's inflation rate is among the lowest out of the 23 metro areas with more than 2.5 million residents for which the Labor Department provides data.
A helicopter flies over Dali cargo vessel which crashed into the Francis Scott Key Bridge causing it to collapse in Baltimore, Maryland, U.S., March 26, 2024.
A helicopter flies over Dali cargo vessel which crashed into the Francis Scott Key Bridge causing it to collapse in Baltimore, Maryland, U.S., March 26, 2024.
Julia Nikhinson/Reuters
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In Baltimore, inflation decreased significantly last year between April and June. The annual rise dropped to 2.8% from April's 5.3%. During this period, food and beverage prices went down by 0.6%, and the energy index experienced an even larger decrease of 1.8%. This is also lower than the Federal Reserve's target for its preferred inflation measure, the Personal Consumption Expenditures price index.
Christina DePasquale, an associate professor at Johns Hopkins Carey Business School, mentioned that inflation in Baltimore remains lower than the national average. This results in a lower cost of living compared to other areas in the state and the entire country, making Baltimore an appealing city to live in.
Similar to the trend nationwide, the recent increase in energy prices has contributed to a rise in overall inflation in the Baltimore metro area.
Baltimore's housing market is pretty good. According to the National Association of Realtors, the median price for a home in the Baltimore metro area was $383,900 in the fourth quarter of 2023. This is slightly lower than the national median price of $384,500 reported by NAR last month.
Housing affordability across the country started to become more difficult when the Federal Reserve started raising interest rates two years ago to tackle high inflation. Although the Fed does not directly set mortgage rates, its decisions have an impact on them.
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The average 30-year fixed mortgage rate hit a 20-year peak of 7.79% in late October, as reported by Freddie Mac. The most recent data indicates that it currently stands at 6.79%, which is higher than any rate observed from 2008 to 2022.
Last year, Baltimore had lower monthly mortgage payments compared to the national average, according to NAR's analysis of the housing market in the metro area.
The number of building permits for single housing units in Baltimore over the past 12 months was 3,679, which is below the long-term average. However, construction activity has increased compared to the previous year, indicating that the local housing inventory has stabilized.
Editor's P/S:
The collapse of the Francis Scott Key Bridge is a tragic event that has shaken the Baltimore region. The loss of life and the damage to the infrastructure are devastating, and the community will need time to heal and rebuild.
However, the economic impact of the collapse is likely to be limited. Baltimore's economy is strong, with low unemployment and inflation rates. The Port of Baltimore, a crucial economic hub, is currently inactive due to debris in the Patapsco River, but officials are using emergency federal funds to clear the wreckage and allow for ship traffic and bridge reconstruction. Insurance companies are also assisting with covering costs.
The successful resumption of port activity in the near future, along with significant federal funding for a new bridge, will help reduce the risk of long-term damage to the Baltimore economy.
