A report from a Delaware economic consulting firm sees a slowdown, but no recession on the horizon.
“While total Delaware employment has surpassed its pre-recession peak, at the industry level this is true for only health care and financial services. Employment in Delaware business and professional services, retail, manufacturing, and leisure and hospitality has still not recovered to the pre- recession peak,” the report from Newark-based DECON FIRST noted.
One weak spot over the most recent four quarters has been output (Gross State Product), which increased at 0.3 percent, well below the national figure. The growth rate in Delaware personal income is 4.1%, with transfer payments Social Security, Medicaid, Medicare, SSI, SNAP) outpacing wage earnings.
The surge in employment in Delaware over the past two years has included many temporary and part-time positions in growth industries such as restaurants and retail warehouse/distribution, the report noted.
While a surge, together with a 5 percent drop in the state labor force participation rate, has led to a reduction in unemployment, it has also contributed to a moderation in the growth wages and, personal income, the report stated.
“The reality is that over the longer run Delaware has a number of serious structural impediments in place: high industrial electric rates, lower quality public schools, and no right to work law. The state corporate income tax is among the highest in the nation, and the top personal income tax rate of 6.6% kicks in at a low household income of $60,000,” the report noted. By contrast, Maryland’s rate of 5 percent starts with income of $100,000.
Residential construction is growing again at a healthy pace. New developments in New Castle County (below the canal) are very active, the report noted.
The DECON FIRST outlook for the remainder of 2016 is employment growth around 1.3 percent, output growth of 1.5 percent and growth in Delaware personal income of 4%. No recession in sight, but a slower economy is in the mix.
To subscribe to the report from DECON FIRST, click here.
