Hartford Business Journal

BOOK OF LISTS 2020 | 9 Don Klepper-Smith Chief Economist and Director of Research, DataCore Partners LLC 2020 will bring economic stagnation to CT The Connecticut economy has shown clear signs of decelerating in many of its economic metrics as real state GDP has actually declined by 7 percent between 2008 and 2018. Over this same period, the U.S. economy has increased by 19 percent, a vivid contrast. The lack of fiscal discipline at the state level continues to be an issue in Connecticut. The state now ranks No. 2 in the country in overall tax burden, while the high overall costs of living, and demographic shifts are factors that are now promoting net outmigration from Connecticut. The Census Bureau recently released data for 2018 showing that the rate of domestic net migration in Connecticut remained relatively unchanged at -0.61 percent, but the state now has the sixth high- est rate of net outmigration, sliding two spots from the 2017 rankings. The data shows that Connecti- cut lost a total of 21,509 people to other states between July 1, 2017, to July 1, 2018, or 414 people per week. Continued net outmigration has adversely affected Connecticut's tax base in recent years. A total of 175,930 people have left Connecticut for other states for the period between April 1, 2010, and July 1, 2018. The new data also raises some interesting questions about what the 2020 data might look like given the less-than-favorable climate within the business community. The Connecticut economy has underperformed in recent years, namely on job growth and income creation. Connecticut has the lowest job recovery rate in New England of 85.1 percent as of Sept. 2019. Total non-farm employment is up only 0.4 percent through Sept. 2019, well below our long-term average annual growth rate of 1.1 percent. Jobs are essential to overall economic health because of the linkages to income, consumer spending, tax revenue and consumer and business confidence. Bottom line: Given a waning business cycle, high taxes, rising outmigration, and new paid family leave initiatives, Connecticut's business community is now facing major challenges to continued profitability heading into 2020. Economic stagnation is likely to continue as long as we adhere to state economic-development policies that are predicated on outdated, anachronistic economic fundamen- tals that were prevalent in the 1950s and 1960s. Patrick J. Flaherty Assistant Director of Research, Connecticut Department of Labor Moderate growth likely as demographics create long- term challenges for CT Assuming the U.S. economy avoids a recession in 2020, Connecticut's econ- omy will continue to grow. Average employment through October is up more than 7,000 jobs above the first 10 months of 2018, a faster pace of job growth than we've seen during the first 10 months in each of the past three years. Healthcare employment is growing, driven by increases in ambulatory care and home healthcare services. Transportation and warehousing will also increase as online shopping continues to grow. Manufacturing, which has been growing for the past three years, will continue to expand. The largest challenge facing Connecticut (and many other states) is demographics. The unemploy- ment rate is low and the number of job openings is high. Businesses are facing difficult challenges filling open positions. This is good news for workers who have faced barriers to employment in the past. This should also lead to faster wage growth. Farhad Rassekh Economics Professor, University of Hartford CT's economy poised to languish All indications are that in 2020 Connecticut will continue to lose population. This population loss in turn causes the housing market to stagnate or even to decline (as it has in many areas). As a result, homeowners see no increase (or even a decrease) in the value of their houses while in many other metropolitan areas, homeowners have enjoyed substantial equity. Potential business creators and young entrepreneurs have little incentive to stay or come to Connecticut. Until and unless we revamp the current policies and devise a credible plan to move the economy forward, Connecticut will languish. ECONOMIST SCORECARDS 2020 CT projected job growth? 2020 CT projected job growth? 2020 CT projected job growth? No Growth Moderate Growth Moderate Growth 2,000 9,500 Fail to add more jobs than it loses 3.8% - 4% 3.4% 4% 0% to 1% 1.5% At best 1% Health care along with warehousing, storage and distribution Health care & social assistance Health care Retail & Manufacturing Retail Housing Industry 2020 GDP growth? 2020 GDP growth? 2020 GDP growth? 2020 new jobs? 2020 new jobs? 2020 new jobs? Industry to add most jobs in 2020? Industry to add most jobs in 2020? Industry to add most jobs in 2020? Unemployment rate by end of 2020? Unemployment rate by end of 2020? Unemployment rate by end of 2020? Industry to lose most jobs? Industry to lose most jobs? Industry to lose most jobs?

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