Recession or No?
Dr. Anirban Basu from Sage Policy Group looks at the Global and Local Economic Outlook for the Coming Year
Last year, the IMF warned of the risks to the global economy, stating that the “sheer size of debt could set the stage for an unprecedented private deleveraging process that could thwart the fragile economic recovery.” But according to Dr. Anirban Basu, who spoke at the New Castle County Chamber of Commerce 12th Annual Economic Forecast Luncheon, much of the negativity relates to things people BELIEVE will happen. His information- and humor- packed presentation gave an overview of global, domestic and local trends, and despite global debt and the IMF warning, he concluded that 2019 will be a fairly decent year for the economy – particularly the first half of the year.
What leads Dr. Basu to this conclusion? Important parts of the US economy such as consumer spending, corporate earnings and construction continue to perform well. US unemployment has been on a downward trajectory since 2011 while the Industrial Production Index, Capacity Utilization Index and Job Openings continue to trend upwards. Wages and salaries are on the rise as they have been since around 2013, but so is the Consumer Price Index and after a steady downward trend, mortgage rates are creeping back up. Despite this, however, there seems to be a renewed interest in homeownership after a steady 10+ year decline.
Go Delaware!Locally, things are looking pretty good for Delaware. The state added 12,778 jobs between December 2017 and December 2018, with our non-farm industry sectors adding jobs faster than the national average. New Castle County alone added 9,972 jobs over that period – that’s an increase of 3.5% - which gives us a current unemployment rate of 2.8%.
Today, Delaware is No. 12 out of 50 states in employment growth, with a 2.2% growth rate – again higher than the national average.
Recession or No?But the big question on the minds of many was whether or not we were heading for a recession given the 10+ years of economic growth that the US has been experiencing. Dr. Basu opened his presentation with a quote by Janet Yellen: “There is always some chance of recession in any year. But the evidence suggests that expansions don’t die of old age”. In other words, expansion continued doesn’t mean that a recession is inevitable. However, Dr. Basu did suggest that a slowdown may be on the horizon and there are still a few unknowns that could yield positives, including a trade deal with China, elimination of steel & aluminum tariffs, and an infrastructure spending plan. All things considered, it seems like we can breathe a sigh of relief and look forward to a relatively positive 2019! Click
HERE for Dr. Basu’s complete presentation and data.
Dr. Anirban Basu is Chairman & CEO of Sage Policy Group, Inc., an economic and policy consulting firm in Baltimore, MD. Dr. Basu is one of the Mid-Atlantic region’s most recognizable economists, in part because of his consulting work on behalf of numerous clients, including prominent developers, bankers, brokerage houses, energy suppliers, and law firms. Dr. Basu has also written several high-profile economic development strategies on behalf of government agencies and non-profit organizations. In recent years, he
has focused upon health economics, the economics of education and economic development. He currently lectures at Johns Hopkins University in micro-, macro-, international and urban economics.