A recent report from PNC Financial Services Group sees the Delaware economic recovery picking up steam late this year and into 2014.
PNC has banking and other financial services operations in Delaware.
Holding back the rebound is exposure to European economic problems and the lack of an auto industry. The state lost both auto plants between 2008 and 2009. In addition, total employment in Delaware remains two percent below the pre-recession figure.
The state’s unemployment rate, which has been running just above 7 percent is near the national jobless rate, after traditionally running below the U.S. figure in the past couple of decades. Income growth is also lagging the national rate.
However, as the national recovery continues, Delaware’s strengths in finance and professional/business services payrolls will lead to stronger job growth in late 2013 and 2014, the report indicated.
The near-term risks are regulations that could come in efforts to avoid future banking failures and have the potential to limit hiring in the financial services sector.
The federal spending sequester will hit Dover hardest, since it is the home of Dover Air Force Base. However, Delaware, overall, does not have a large number of federal jobs that could be subject to furloughs and other cuts.
Manufacturing remains flat, thanks in part to the likely demise of plans to build a Fisker automobile in the state.
The report indicated that gradual recovery in the housing market that began in 2012 continues to strengthen, thanks to affordable properties and stronger demand. Prices should continue to increase into 2014.
Home-building is also improving, Multifamily construction drove the rebound in 2012, with permits tripling over the year. That has been followed by growth in single-family homes. Aiding the recovery is the lack of over-building in the state, the PNC report indicated.
“The improving housing market will contribute to the area’s overall recovery, as price growth will support consumer spending as households feel wealthier, and better home building leads to more construction jobs,” the report stated.
Over the next couple of years, the state is expected to be aided by a favorable business environment, spillover growth from nearby metro areas, an improved housing market and an upturn in population growth.
“Over the longer run, Delaware’s skilled workforce, pro-business environment and concentration in well-paying finance will lead to employment growth above the national average, and well above average for the Northeast,” the report stated.
Population growth and migration, however, will not return to the level of boom years, although workers seeking affordable homes and retirees will bring new residents to the state, the report indicated.
