As noted in the lead story in this week’s issue, the Moody’s report on Delaware being the only state to be at risk of a recession put the spotlight on the state’s economic performance.
The report – coming out of the former Economy.com operation in West Chester, Pa. – crunched a lot of financial, housing and other types of data.
The non-economists among us were left to wonder how a state with an unemployment rate running at the national average could end up in such a vulnerable state.
In taking a look at the summary of the report, it appears that worries about the state’s financial services sectors help drive the rating. The fear is that efforts to regulate global giants such as Chase, Bank of American and Citi, would result in those companies cutting back on employment.
So far, that has not happened. With gridlock continuing in Washington, D.C., it is hard to imagine that any major push against the so-called “too big to fail” banks will emerge.
It is equally clear that real estate and construction are also weak spots. Without a recovery in those areas, it is hard to imagine that the state’s economy can pick up steam. Also, manufacturing has yet to see the upturn reported elsewhere. We are seeing some signs of more hiring in this area.
Predictably, the Markell administration is defending its record while Republican opponents view the Moody’s rating as evidence that the state is on the road to recession or worse. They are also quick to point to what they see as boondoggles with Fisker Automotive and higher electric rates that are coming out of the Bloom Energy deal.
It is evident that a sluggish economic recovery will become an election issue.
Republicans will have difficulty turning that angst into more seats unless the party can come up with an economic plan of its own that goes beyond talk of lower taxes and less regulation.
What may be just as significant is the uneasiness within Markell’s own party about the state of the economy.
Some Democrats are pushing for a greater emphasis on the blue collar jobs that seem to be missing in the current recovery. New Castle County Executive Tom Gordon has announced plans for an economic strategy for a county that basically dismantled its economic development agency decades ago.
At the same time, Democrats have environmental activists on their left flank who are not happy with the revival of the Delaware City Refinery and plans for the $1.1 billion Data Centers project in Newark. The Data Centers plan is evidence of a general sense of uneasiness in a changing college town.
While the number on the fringe is small, their influence is worrisome in a state that cherishes its image as a business-friendly environment.
It all adds up to a chance for a badly needed debate about jobs and economic growth.
