Economic reports come and go. Then we had a Reuters story on a Moody’s report indicating that Delaware was the only state in danger of falling back into a recession. Shortly after the story hit on Sept. 11th, it was quickly tweeted and posted on Facebook. By the next morning, it was the lead story in the News Journal and a hot topic in economic circles.
New Castle County Executive Tom Gordon moved quickly, citing the Moody’s report in announcing plans for an economic development strategy for the state’s most heavily populated county. Gordon’s comments were confined to a Facebook post, although he promised to release further details in coming weeks and months.
The report came out of Moody’s Analystics, a respected economic research arm of the financial ratings giant operating out of nearby West Chester, Pa. The operation is sometimes known by its previous name, Economy.com, a successful Internet start-up that was acquired by Moody’s several years ago. Banks, larger businesses and and other users of financial information pay Moody’s for the economic analysis. A summary of the findings was released to the media.
Previous Moody’s reports had gained little local attention, even though Delaware was one of only three other states (Wisconsin, Illinois and Alabama) that had previously been listed as being in risk of falling into recession. But with those states off the list, Delaware’s economic performance was thrust into the spotlight.
The report also played into the increasingly uneasy feeling that the state has somehow lost its way.
Critics see the Makell administration and General Assembly attempting to navigate the state’s economy without a clear vision for the future. Also coming in for criticism is what is viewed as a focus on social legislation (same sex marriage) and climate change.
The administration was quick to disagree. “While it’s fair to say that the pace of the national recovery has proven frustrating to all states, Moody’s conclusion is internally inconsistent with key elements of its own report and others’ assessment of Delaware’s prospects, and at odds with the most recent developments in the state’s economy,” said David Gregor, deputy secretary of finance.
The report, according to Gregor, includes the likelihood of recession in the next six months. Delaware’s likelihood is 18%, but 17 other states have an equal or higher probability of recessions, Gregor said.
“None of these states are labeled as being ‘at risk of recession,” however, including the four states that have probabilities of recession listed as 30% or higher. That fully one-third of all states could have equal or higher likelihoods or recession, but only Delaware is labeled as “at risk” raises doubts about Moody’s conclusion,” Gregor said.
Cathy Rossi, communications director in the governor’s office, also pointed to recent announcements of expansion at financial service companies.
“We are more optimistic,” Rossi said. “The indicators we are seeing point to a stronger Delaware economy and employment growth. We’re seeing significant growth in the financial sector, including several announcements about financial institutions growing here and Delaware has outpaced the nation over the past year in job gains.”
She took note of jobs being added by Allen Harim Foods, ILC Dover, Amazon, Ashland, and GE, Miller Metal in Bridgeville and Testing Machines in New Castle.
Also cited by the administration were recent reports from the Federal Reserve Bank of Philadelphia. Earlier in the summer, a Federal Reserve economist said during a seminar in Newark earlier in the summer that weaknesses in Pennsylvania were a bigger issue than Delaware’s troubles.
The economist said he was not speaking for the Philadelphia Fed
