Central Delaware economic forecast predicts recession, big projects
Central Delaware economic forecast predicts recession and big projects
Katie Tabling January 31, 2023
DOVER — Kent County has groundbreaking projects on the horizon for the year and beyond, but a Dover-based financial advisor warned businesses in central Delaware there’s still a chance a recession is looming. According to David Boothe, President and Founder of BIG Investment Services, “Every single sign of a recession flashes up pretty
David Boothe, President and Founder of BIG Investment Services, addressed the signs he’s reading of a possible recession at the 2023 Central Delaware Economic Forecast Breakfast. | DBT PHOTO BY KATIE TABLEING
DOVER — Kent County has groundbreaking projects on the horizon for the year and beyond, but a Dover-based financial advisor warned companies in central Delaware that there are another chance of a recession is on the way.
According to David Boothe, President and Founder of BIG investment services, every single sign of a recession is “flashing pretty bright red,” although at this rate it’s unclear when it will happen. Signs Boothe is watching closely include interest rate yield curves, the S&P 500 stock index, consumer debt and, of course, inflation and unemployment numbers.
Boothe served as the big picture analyst for the Central Delaware Chamber of Commerce’s annual Economic Forecast Breakfast Tuesday morning.
“I would expect a recession to be mild at worst, when it comes to that‘ Boothe told businesspeople and local officials at the Maple Dale Country Club. “But many indicators are pointing to a recession, so keep that in mind.”
Boothe studied the difference between long-term and short-term interest rates and found that the trend lines have reversed, as well as yet another drop in the Conference Board Leading Economic Index in December – down 4.2 percentage points between June and December – as historic signs of a recession. He said that historically, when the leading economic index fell more than 3%, a recession followed.
However, consumer spending remains rock solid, supporting gross domestic product growth despite headwinds, Boothe noted. with the annual inflation rate It ended at 6.5% for 2022 and a December unemployment average of 3.5%. He also noted that these are historical signs of an impending downturn.
“We’ve never had inflation above 5% and unemployment below 4% and no recession. These things have never happened before and this time could be different,” he said. “But here’s the thing: Lumber prices plummeted last year, and retail and industrial production are collapsing right now. Employment itself is a lagging factor. If we have a recession, people will probably look back and say it started here.”
Speaking of the stock market, Boothe noted that the market is “firming on the surface,” and there’s a chance the S&P 500, his index of choice for stocks, could reach above 4100. But if that trend reverses and moves south of 3900, Boothe said to take it as a warning that the stock market could turn lower.
“You have to be careful because many agree that we must have a recession. But the market is always smarter than you. Maybe there will be a curveball. Maybe the recession will come later like 2024,” he said. “We just don’t know.”
In general, should a recession hit, Boothe said lower interest rates will arrive to soften the blow, but about 5% instead of the 2.5% in the months immediately following the start of the COVID-19 pandemic. He also advised considering small-cap stocks because they’re much better valued and can historically hold the lead in the market for about a decade.
Saving and having cash on hand would also be ideal if the economy heads for a slowdown.
Other speakers at the economic forecast included Brenda Wise, director of policy and communications for the state’s Office of Management and Budget, who provided an overview of the governor’s $5.4 billion budget proposal. Highlights for Kent County officials included education funding, $31.5 million for affordable housing initiatives, and millions for economic development funds.
Linda Parkowski, Executive Director of Kent Economic Partnership, emphasized Gov. John Carney’s importance in continuing to fund the Site Readiness Fund and the Transportation Infrastructure Investment Fund as it has been a great boon to multiple locations in central Delaware over the past year.
Looking ahead, Parkowski said her office is working on at least 27 prospects, 14 of them in manufacturing. Together, these prospects have the potential to create 956 jobs and bring a $576 million investment to the county. Key locations that she predicted will play a role in the coming year include: Duck Creek Business Campus in Smyrna,Garrison Oak Business and Technology Center in Dover, and the future Harrington Industrial Parkwhich is still in the master plan.
“This park may be the only real one we have in central Delaware and it will probably take two years to complete. But I bet it’s going to be amazing,” she said. “We’re already getting calls about it. It’s not ready yet and we already have companies that want it.”
However, one of the biggest challenges to Kent County’s economic success is educating and retaining a workforce. The population of the county is about 186,215 people according to 2022 census data, but the largest population growth is among those over 65 years old.
“Our education system is doing a great job, but our education is currently taking place in silos. If you’re a business, you’ll need to look around at the employment office, various colleges, and programs. It’s almost like you have to hire one person just to navigate the system to get the training you need,” Parkowski said. “We’re a small state and we can easily fix that. We also need short-term certification programs just so we don’t keep adding to the wait times for things customers need to fix.”
