Hartford Business Journal Special Editions

DECEMBER 24, 2018 • HARTFORD BUSINESS JOURNAL | 13 Don Klepper-Smith Chief Economist and Director of Research, DataCore Partners LLC CT economic-development strategy outdated Revised data show that Connecticut ranked 50th in real GDP growth in 2017, last in the nation, down 1.1 percent, and the state still has the lowest job-recovery rate since the Great Recession in New England at 90.4 percent. The state's economy has now added 107,700 jobs since the worst of the Great Recession and is not likely to see full job recovery until mid-to-late 2019. Bottom line: This "economic stagnation" is likely to continue as long as we adhere to state economic-development policies that are predicated on outdated, anachro- nistic economic fundamentals that were prevalent in the 1950s and 1960s. Between 2007 and 2017, the U.S. economy as measured by real GDP has risen 15.5 percent. During this same period, new revised data shows that the Connecticut economy has declined 9.2 percent. In my opinion, the reasons as to "why" Connecticut has lagged in economic terms is a function of declining business confidence, rising out-migration, a lack of fiscal discipline at the state and local level, and misguided economic-development policies. Today, massive structural change has reshaped our economic landscape, and cur- rent state economic-development policies have failed to keep up. The Laffer Curve shows that further tax increases in Connecticut will only exacerbate our economic problems. The only path to economic revitalization is one that reins in wages and benefits for state workers, while aggressively promoting manufacturing growth. We're now losing a net of about 428 people per week to other states because of the lack of fiscal discipline at the state and local levels. And with seniors earning little to nothing on savings, and the aging of Baby Boomers now becoming more apparent, the mounting fiscal stress is already baked into the pie. Patrick J. Flaherty Assistant Director of Research & Information, Connecticut Department of Labor CT's demographics will stunt economic growth Connecticut's economy has been adding jobs since the end of the Great Recession and has more than recovered all of the private-sector jobs lost during the downturn. The government sector continues to contract and is holding back overall job growth. Despite growth that is slower than the nation and our neighboring states, the unemployment rate has fallen. In the past year, jobs have increased by more than 22,000 with gains in health care and social assistance, manufacturing, accommodation and food service, construction and finance and insurance. Retail trade, state government and local government have all declined. Transportation and warehousing also increased, offsetting some of the decrease in retail resulting from changes in shopping patterns as consumers do more shop- ping online. The increase in manufacturing is a big change for Connecticut, which has seen manufacturing decline for decades. Looking ahead, recently released projections for employment by industry and occupation show continued growth for Connecticut, but at a slower projected pace than the nation. The slowdown is largely driven by demographics. Population projections from the Connecticut State Data Center predict a slowdown in Connecticut's population growth. The population is also expected to age, with declines in the school-aged population and increases in the number of people over 65. Farhad Rassekh Economics Professor, University of Hartford Bearish outlook for CT's economy in 2019 Unforeseen changes in economic variables often render economic forecasts inaccurate. With that qualification in mind, I believe there is little hope for the Connecticut economy to rebound in the coming year. This bleak economic outlook rests on the possibility that state-government policies — largely responsible for the lackluster economic perfor- mance in Connecticut in the last several years — will likely continue in 2019. I hope this forecast will be proven wrong. What's your 2019 economic outlook for Connecticut? Moderate growth How many jobs will Connecticut add? 15,000 What will Connecticut's unemployment rate be at the end of 2019? 4% What type of GDP growth will Connecticut see in 2019? 1.1% Which industry will add the most jobs? Health care & social assistance Which industry will lose the most jobs? Retail trade What's your 2019 economic outlook for Connecticut? Little to no growth How many jobs will Connecticut add? 2,000-5,000 What will Connecticut's unemployment rate be at the end of 2019? 4.5%-5% What type of GDP growth will Connecticut see in 2019? Less than 1% Which industry will add the most jobs? Health care & education Which industry will lose the most jobs? Information What's your 2019 economic outlook for Connecticut? Moderate growth How many jobs will Connecticut add? 2,500 What will Connecticut's unemployment rate be at the end of 2019? 4.5%-4.8% What type of GDP growth will Connecticut see in 2019? 2% Which industry will add the most jobs? Health care & information technology Which industry will lose the most jobs? Construction ECONOMIST SCORECARDS

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