Hartford Business Journal

8 | BOOK OF LISTS 2021 Steven P. Lanza Associate Professor in Residence, University of Connecticut Department of Economics 2021 will be a year of "solid rebuilding" As Connecticut's COVID death toll soared in spring, the state lost a staggering 291,000 nonfarm jobs. Putting that number in perspective, it's nearly twice the blow suffered in the early 1990s recession, more than four times the loss in the 2000 recession and fully one of every six jobs in the economy as of February. Remarkably, by year's end, the state had reclaimed two-thirds of the jobs given up. But the slowing pace of monthly employment growth suggests the easy part is over. Many who were temporarily laid-off have been rehired, leaving those permanently let go still looking for work. The mounting surge of new infections across the country and across the state will impede that progress, but with vaccines rolling out early in the year, 2021 will be a year of solid rebuilding. Expect the state to add 43,000 jobs over the year, with the largest gains accruing in industries hardest hit — leisure and hospitality, particularly accommodation and food services — as residents release some pent-up demand. Among the laggards: government, as the state and its municipalities struggle with the pandemic's economic overhang. With jobs returning, the unemployment rate will ease, continuing its descent from July's 10% level to about 5%. A word to the wise: these "official" numbers almost certainly undercount the jobless. The high volume of initial claims for unemployment insurance indicates joblessness could be double its estimated rate, according to state Labor Department analysts. Assessing the toll on real output is more difficult because state GDP data lags that for the nation. U.S. GDP likely shrank just 3% in 2020, thanks to a torrid 33% annualized rebound in the third quarter, which offset the precipitous 31% drop the quarter before. The consensus forecast sees 4% growth in 2021, which would lift U.S. output above pre-pandemic levels. Against this backdrop, Connecticut output probably shrank about 5% in 2020, and my estimate of 3.9% state GDP growth in 2021 won't be enough to recoup those losses. One possible omen of a brighter future: the state's housing market is booming as virus-weary urbanites flee cities for the haven of Connecticut's socially-distanced suburbs. Patrick J. Flaherty Assistant Director of Research, Connecticut Department of Labor CT poised for a strong economic rebound Connecticut suffered huge job losses in March and April 2020, but has added jobs each month since. Nevertheless, nearly every industry is likely to be below pre-pandemic levels at the end of the year. Assuming a successful distribution of an effective vaccine, pent-up demand for services that were delayed or avoided during the pandemic (such as routine medical procedures) will lead to a spike in employment in late summer or early fall 2021 – strong growth compared to the depressed 2020 level and moderately better than 2019. Employment in accommodation and food services will be strong as consumers return to normal patterns of dining in restaurants and socializing. The smaller arts, entertainment, and recreation sector will see a similar rebound. On the other hand, the pre-pandemic trend of retail sales shifting from in-person stores to delivery accelerated during the pandemic. These trends will not reverse although the 2021 holiday season will see strong sales. The relative weakness in retail will be offset by continued strength in warehousing and delivery employment. A quick snapshot of what five Connecticut economists and business professors think will happen to the state's economy in 2021 ECONOMIST SCORECARDS What's your 2021 economic outlook for CT? What's your 2021 economic outlook for CT? How many jobs will CT add? How many jobs will CT add? What type of GDP growth will CT see in 2021? What type of GDP growth will CT see in 2021? What will CT's unemployment rate be at the end of 2021? What will CT's unemployment rate be at the end of 2021? Which industry will add the most jobs? Which industry will add the most jobs? Which industry will lose the most jobs? Which industry will lose the most jobs? Strong growth Moderate growth December 2021 will be approximately 83,000 jobs higher than December 2020 43,000 3.5% 3.9% 4.2% 5.4% Accommodation & food services Leisure & hospitality (specifically accommodation and food services) All industries will gain but retail trade will show weakne Government

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