Delaware’s economy is recovering, gaining tailwinds from low gas prices, auto buying, a booming stock market, and a stabilizing global economy, according to a leading economist.
Employment here grew faster than in other Mid-Atlantic states, and Delaware ranked seventh in the nation for employment growth in 2014, said economist Anirban Basu, the speaker at the New Castle County Chamber of Commerce’s sold-out economic forecast.
Basu said Delaware created 11,000 jobs in 2014, for a 2.7-percent gain. That compares with a 0.9-percent gain for Pennsylvania, 0.8 percent for Maryland, and 0.7 percent for New Jersey.
He pointed out that the many states that created more jobs have oil or gas reserves. North Dakota ranked first, with a 5.4-percent gain, and Texas was second, with 4 percent. Next up was South Dakota, with a 3.3-percent gain, and Utah, with 3.5 percent.
New Castle County is “really taking off,” and Delaware is in a recovery, Basu said, but he added, “A lot of people still don’t feel that great about the economy.”
“The gain from the economic expansion has been very much segregated in the hands of a few,” he said. “I do not say that from a political perspective. That’s what the data shows.”
Basu said corporate stocks and stock prices have really come back, but income growth is relatively flat, and housing prices have not rebounded. “We do not see a lot of growth in wages yet,” he said. “By and large, wage pressures have not been there.”
Despite that, Basu characterized the recovery as consumer-led. He said government spending has not been a driver of economic growth, and it probably won’t be because voters are sensitive to new taxes. Exports are not a driver because the global economy is struggling, and the U.S. dollar has grown stronger, he said.
“My outlook for 2015 is pretty good, and, at the heart of the recovery, has got to be the consumer,” said Basu. “Thankfully, they are more confident.”
Delaware’s residential building permits were up in 2014—1,526 in New Castle County, 995 in Kent, and 2,295 in Sussex. Basu said Sussex’s growth was fueled by an influx of wealthy retirees escaping Maryland and New Jersey estate and inheritance taxes. Delaware has an estate tax, but not an inheritance tax.
Basu said he often hears people in his home state of Maryland say, “Why can’t we be more like Delaware?” He said businesspeople wish they had a local Delaware Technical Community College to create training programs that dovetail with businesses’ needs.
“For a state with 940,000 people, Delaware is about as diversified as a state can be, economically. Industry has always been part of the story here,’’ he said. “This is a place where government and the private sector really work well together.”
More from the economic forecast:
- There are still black-swan threats that could occur but are not likely, such as cyber threats, contagion, Iran, Israel-Iranian conflict, and EMP threats—dangerous electromagnetic pulses generated by detonating a nuclear weapon in orbit above us or from a freighter off our shores.
- The five fastest-growing countries in 2015 are projected to be Turkmenistan, Chad, Mongolia, the Democratic Republic of the Congo, and Côte d’Ivoire, all oil nations.
- Nonfarm employment in the Wilmington area was up 2.6 percent, with the leading industry being professional and business services. Approximately 2,800 people were employed in professional and business services. About 100 were employed in manufacturing.
- Projections for 2015 growth are 0.9 percent for France, 1.3 percent for Germany, 0.4 percent for Italy, 0.6 percent for Japan, 2.7 percent for the United Kingdom, 3.6 percent for the U.S., 2.3 percent for Canada, 3.2 percent for Mexico, 6.3 percent for India, and 6.8 percent for China.