Three Philadelphia Federal Reserve economists see built in-strengths in a Delaware economy that has experienced a sluggish recovery.
Paul R. Flora, Elif Sen and Mike Trebing made their remarks at an update at the University of Delaware Tuesday.
The economists have been visiting with employers in Delaware to get “behind the numbers,” Flora said.
Gov. Jack Markell said he appreciated the work of the Philadelphia Fed in examining the economy of the state. The territory covered by the Philadelphia Fed includes New Jersey, Pennsylvania and Delaware. Trebing, who researches manufacturing in the Philadelphia Fed’s area, says that sector of the economy is seeing some growth in Delaware. At the same time, the overall influence of manufacturing has been declining.
Sen says financial services became a bigger factor in the economy than manufacturing after 2000. That trend continued in 2008 and 2009 when the state lost its auto industry when both the GM and Chrysler plants closed.
Healthy areas in manufacturing are food products and electronics. Manufactured in the state is sophisticated testing and medical equipment.
According to Flora, Delaware’s strengths include its legal and incorporation system. No other state has been able duplicate the advantage offered by Chancery Court, a national and even worldwide hub when it comes to dealing with corporate legal disputes.
State government also provides an advantage, thanks to a more bipartisan approach and a commitment to maintaining a high credit rating, Fora says. In comparing Delaware to the two other states in the Philadelphia Fed region, Fora sees fewer potential problems that could befall the economy. Pennsylvania, by contrast, has been relying less on business taxes, but has been cutting services, Flora says. Keeping employment on an upward track in Delaware is the health care sector, which continued to gain jobs during the downturn. Flora stressed that his viewpoints did not necessarily reflect those of The Fed.
During a question and answer session, Gov. Markell said steps taken to control health care costs could eventually result in job losses in that category. As governor, Markell has struggled to find revenues to deal with rising Medicaid and other health-related spending. Sen says the employment trend in heath care bears watching. There have been scattered reports here and elsewhere of health care providers laying off staff.
