Delaware - Economy



Since the 1930s, and particularly since the mid-1970s, Delaware has been one of the nation's most prosperous states. It was one of the few states that whose economic growth rate actually increased during the national recession of 200, accelerating from 4.5% in 1998 to 6.1% in 1999 to 7.3% in 2000, and to 8.75% in 2001. Although manufacturing—preeminently the chemical and automotive industries—has historically been the main contributor to the state's economy, its contribution to gross state product shrunk from 16.5% in 1997 to 12.9% in 2001, compared to a 43% contribution from the finance, insurance and real estate sector and 15.3% from general services (hotels, auto repair, personal, health, legal, educational, recreational, etc). The largest employers in the manufacturing sector, the chemical and automobile manufacturing industries, experienced negative growth coming into the 21st century, output from motor vehicles and equipment manufacturing falling 34% 1999 to 2001, and the output from chemicals and allied products manufacturing showing a net decline of 2.6% 1997 to 2001. By contrast, financial services grew 43% during this period, and general services grew 36.4%. Job creation in manufacturing, which was at a positive 2% year-on-year rate in 1999, turned negative (to net layoffs) by the beginning of 2000 and continued at negative rates throughout 2001 and 2002. Job creation in the finance, insurance and real estate (FIRE) sector continued at year-on-year rates of 2% to 3%, but then turned sharply negative in 2002, reaching –4% by the end of the year. Office space vacancy in Wilmington reached 15% in the fourth quarter 2002, but this was below the national average of 16.5%. Positive factors that augur well for a relatively rapid economic recovery in Delaware are continued moderate housing costs that make Delaware more attractive than neighboring states with higher costs, and a related above-average 17% gain in population 1991 to 2001 (the national average-was 13%) that largely reflected the movement of businesses to Delaware's relatively low-cost business environment.

Delaware's gross state product in 2001 was $40.5 billion, up 29.6% from 1997, only 8.5% of which was attributable to the public sector, the lowest percent among the states. The major contributors to gross state product in 2001were financial services ($17.5 billion); general services ($6.2 billion); manufacturing ($5.2 billion); wholesale and retail trade ($4.3 billion), government ($3.4 billion); and transportation and public utilities ($1.9 billion).



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