Hartford Business Journal

Variants, supply chain issues and labor shortages still loom in 2022 C onnecticut's economy stumbled out of the gate in 2021 as the state battled a deadly winter wave of the coronavirus. Employers added fewer than 1,000 jobs in the first quarter, real GDP advanced just 1.8% on an annualized basis, and unemployment remained stuck above 8%. But as vaccines became widely available in the spring and COVID cases plummeted, the economy really hit its stride. Payrolls grew by over 11,000 in quarter two, nearly 19,000 in quarter three and could increase another 15,000 in quarter four, if current trends continue. State GDP surged at an annualized 5.9% in the spring and the unemployment rate dropped below 7% by September and stayed there. Connecticut marked this progress even as it fought off the delta variant in the fall — a testament to the efficacy of the vaccines and the state's public health efforts, and a harbinger of continued improvement in 2022, particularly now that children have access to vaccines and adults are rolling up their sleeves for boosters. Expect the state to add another 37,000 jobs in the new year, with leisure and hospitality again leading the way as Nutmeggers steadily return to their pre-pandemic habits. But the road to recovery will be bumpier for the retail trade sector, which is hobbled by a secular shift to online shopping that has only accelerated during the COVID era. Despite the rising level of payrolls, the state's unemployment rate will remain stubbornly high, ending 2022 at about 6.2%. Real GDP, which appears to be advancing at a 4% annual rate in 2021, should match that pace in 2022. Besides the state's aging workforce and struggle to maintain a critical mass in the manufacturing and financial services sectors, Connecticut will face continued headwinds in 2022 from coronavirus variants and supply chain shortages. But as John Adams famously said, every problem is an opportunity in disguise, so if supply bottlenecks trigger more local sourcing, Connecticut businesses could be the beneficiaries. CT economy will continue to rebound, as long as workers rejoin labor force C onnecticut continues to rebound from the declines of early 2020 caused by the COVID-19 shutdown. As of Nov. 2021, jobs had increased for 11 consecutive months and the unemployment rate had fallen rapidly. These trends will continue in 2022 as patrons return to restaurants, stores and theaters. Manufacturing, which had been stable for nearly a decade, was on an upward trend before the pandemic and will resume its growth. Routine medical procedures will become, once again, routine. Total employment will achieve its pre- pandemic level as workers who were unemployed, or left the labor force due to the pandemic, return to work. Our projections are based on labor demand. One risk to the forecast is labor supply — will there be enough workers to fill the jobs that we project? While the high "quit rate" has received a great deal of attention, the vast majority of "quits" are leaving one job to take another. This does not reduce overall labor supply. On the other hand, there are potential workers who have left the labor force for reasons such as fear of the COVID-19 virus or difficulty obtaining child care. Our projections assume there will be progress on these issues by the end of 2022. Another risk to our projections is the trajectory of the COVID-19 virus and its variants. A vast majority of Connecticut's workforce has been vaccinated and medical science indicates that this provides a great deal of protection. Our projections assume that the vaccinations and other public health measures will be successful in keeping the infection rate low in Connecticut — allowing for continued job growth and unemployment rate declines. What's your 2022 economic outlook for Connecticut? What's your 2022 economic outlook for Connecticut? What type of GDP growth will CT see in 2022? What type of GDP growth will CT see in 2022? How many jobs will Connecticut add? How many jobs will Connecticut add? Which industry will lose the most jobs? Which industry will lose the most jobs? What will Connecticut's unemployment rate be at the end of 2022? What will Connecticut's unemployment rate be at the end of 2022? Which industries will add the most jobs? Which industries will add the most jobs? Moderate growth Moderate growth 4% 4.5% 37,000 80,000 Leisure and hospitality Health care and social assistance Retail trade No industries will lose jobs in 2022 6.2% 4% Steven P. Lanza Associate Professor in Residence | UConn Department of Economics Patrick J. Flaherty Director of Research and Information | Connecticut Department of Labor 19 HARTFORDBUSINESS.COM | JANUARY 3, 2022

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