A leader in federal banking predicts a slow economic comeback for southern Delaware.
President and CEO of the Federal Reserve Bank of Philadelphia Patrick Harker addressed the Delaware State Chamber of Commerce in a teleconference Tuesday.
He says it’s not just government stay-at-home orders and other restrictions hurting the economy, but people’s concern over the virus itself. He notes dips in consumer spending before the economy was largely shut down.
Harker says that while he expects manufacturing to make a comeback as the nation’s economy opens back up, he does not expect the same for the tourism and hospitality industry—which could mean a slower recovery for Kent and Sussex counties.
“Businesses may have enough experience teleconferencing instead of holding physical meetings, that they may choose to cut back on corporate travel. Families may choose to avoid crowded spots like amusement parks, cruise ships and packed beaches,” said Harker.
The Delaware tourism industry accounts for more than 44,000 jobs and $3.5 billion in GDP, according to the state’s Office of Tourism.
Harker says damage to hotels and restaurants could be long-lasting and even permanent.
He adds that the speed of the nation’s economic rebound will likely hinge on whether or not there is a second wave of the virus. But he predicts we’ll see “brutally painful” second quarter data first.
The former Univ. of Delaware president says he’s “acutely aware” of the damage dealt to the medical and education sectors by the coronavirus pandemic. He says Delaware’s health systems and higher ed institutions may require bailouts from the Federal Reserve.
“The Federal Reserve is thinking carefully about setting up facilities that can provide direct lending to colleges, universities and nonprofit medical institutions,” said Harker. “This is crucial for Delaware, because ‘eds and meds’ are vital to the state economy.”
Harker notes more than 17 percent of the Delaware workforce is employed by these sectors.
Harker adds the global response to the coronavirus pandemic may also have an effect on traffic in and out of the Port of Wilmington.
He says unlike the recession in 2008, he expects finance and banking employment to remain steady. He says the goal of the Federal Reserve is to use its “vast lending powers to maintain our underlying economic infrastructure by making sure that every sector of the economy has access to liquidity.”