Philly Fed index forecasts shrinking Delaware economy in 2nd quarter

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Delaware is one of nine states that could see its economy shrink in the second quarter, according to a report from the Federal Reserve Bank of Philadelphia.

The information came from the Philadelphia Fed’s leading indexes for all 50 states for November 2019.

The indices are a six-month forecast of economic figures. The Federal Reserve bank’s territory includes much of Pennsylvania, southern New Jersey and the entire state of Delaware.

Forty-one state indices are projected to grow over the next six months. The figures will be closely watched as the November election approaches. The Trump administration continues to tout the performance of the economy during the president’s first term and chances of a recession in 2020 appear to have lessened as the stock market hits records.

The Los Angeles Times reported that the nine-state figure is the most since the deep recession of 2009.

The Philadelphia Fed has developed a similar leading index for the entire nation. The nation index sees a 1.4 percent growth rate over the next six months. That’s below the three percent rate that is often viewed as a sign of solid economic growth.

The leading index for Delaware was -0.7 in November, according to the report.

Delaware saw a decrease in previously strong activity in building permits. However, unemployment claims decreased. The state has seen an uptick in its unemployment rate in the past few months. However, openings are plentiful in many job categories.

Smaller economic declines are forecast for New Jersey and Pennsylvania. Pennsylvania is seeing a slowdown in drilling for natural gas as prices remain low.

West Virginia, which is still struggling with the decline of the coal and chemical industries, is expected to see the biggest contraction.

Delaware continues to cope with a steep loss of manufacturing jobs in recent decades that included the 2009 closing of both of its auto plants.

Growth in construction, restaurants, tourism and lodging jobs has partially offset those losses. However, outside of construction, pay scales are lower in growing sectors of the economy where a college education is not required.

Critics have claimed that economic policies by Democrats, who have dominated the ranks of elected officials in recent decades, have contributed to lackluster economic growth figures.

Delawareans may get some insights into the figures when Philadelphia Fed President Patrick Harker speaks on Feb. 10 at the annual economic forecast of Lyons Companies and the University of Delaware. Harker is the former president of the University of Delaware.

The next release of the state leading indices will be on February 4.

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