Good afternoon,
Many are getting uncomfortable with the drumbeat of media coverage on a possible recession.
Yes, there are signs of a slowdown, but I see nothing that is signaling a major downturn, despite what you might be reading or hearing.
The Axios site has a good explanation for the media reaction to the current state of affairs. It centers around the lack of warning of the nearly catastrophic economic downturn in 2008 and the surprise election of Donald Trump in 2016.
The result has been a laser focus on the state of the economy in the past couple of months, with proclamations of boom times followed by demands to cut interest rates.
All is not well when it comes to the economy, but there is no reason to believe that the current expansion can’t last for a while longer.
The media reactions are not because reporters and editors are out to get Trump (some of our Facebook friends feel otherwise). It harkens back to 2008 and the past couple of elections.
Another factor involves local economic conditions. In the case of Delaware, the recovery was painfully slow. That augers well for the recovery sticking around for a while in the First State. For one thing, there is little chance of a residential real estate price bubble that could burst in other parts of the country.
In northern Delaware, the economy is benefitting from the relative strength of Philadelphia’s economy. A building boom in Philly, coupled with local projects, have kept the construction industry, in decent shape.
We are also seeing signs that logistics jobs are on their way as supply chain undergoes a revolution in delivering products to homes and businesses. Yes, the robots are coming and locally developed smartphone apps developed are already here.
Then we have the early 1990s. At that time, northern Delaware underwent a painful period as the bank boom slowed down and commercial real estate struggled.
It appeared that relentless local media coverage at the time led to businesspeople pulling back, perhaps making the downturn worse than it should have been.
Profound changes did take place throughout the decade as DuPont and Hercules downsized. The situation was masked to some extent by the growth at short-lived high-flying credit card banker MBNA.
Fast forward to 2019 and business people and others have better access to information on the economy, despite the noise we see online
Don’t ignore the media reports or the “sky is falling chicken littles” we typically see at this stage in the cycle. Instead, keep tabs on industry trends and talk with your customers whenever possible as a way to “take the temperature” of the economy.
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