Hartford Business Journal

18 HARTFORDBUSINESS.COM | JANUARY 9, 2023 ECONOMIC SCORECARDS Despite macroeconomic pressures, CT's underlying economy is strong F ollowing national trends, interest rate hikes are hav- ing an effect on Connecti- cut's housing market. While housing is often a harbinger of a recession, the risks of a severe national recession have lessened as inflation, while still high, has moder- ated from recent peaks. The Fed's strategy on interest rates moderated economic growth throughout the U.S. However, the Fed will not need to be as aggres- sive in coming months as was feared in the summer of 2022. This is welcome news as it sug- gests that any recession would be relatively mild and short; the "soft landing" pursued by the central bank is now the most likely outcome. For Connecticut, a soft landing will slow employment growth in some sectors but not halt job growth or send us into negative territory. Additionally, current job postings are at record highs and unem- ployment is low so any slowdown is unlikely to cause a significant increase in the unemployment rate. Connecticut was on track to add over 40,000 jobs in 2022, well above the 2023 forecast of 25,000. Manufacturing was partic- ularly strong in 2022 with trends likely to continue in 2023. It's worth noting that much of the manufacturing employment in Connecticut is related to U.S. defense. Congress sets those budgets, making that industry less reactive to overall economic highs and lows. Economic factors beyond state control, such as energy cost increases caused by current geopolitics, are vulnerabilities, hard to forecast and have impacted individual, municipal and state budgets. Connecticut's underly- ing economy is strong and the state labor force participation rate remains above national levels. patricK Flaherty Director of Research and Information ConneCtiCut Department of Labor HOW MANY JOBS WILL CT ADD IN 2023? 25,000 HOW MANY JOBS WILL CT LOSE IN 2023? -16,000 WHAT WILL CT'S UNEMPLOYMENT RATE BE AT THE END OF 2023? 4% WHAT WILL CT'S UNEMPLOYMENT RATE BE AT THE END OF 2023? 4.7% WHAT'S YOUR 2023 ECONOMIC OUTLOOK FOR CONNECTICUT? Moderate Growth WHAT'S YOUR 2023 ECONOMIC OUTLOOK FOR CONNECTICUT? No Growth WHAT TYPE OF GDP GROWTH WILL CT SEE IN 2023? 2% WHAT TYPE OF GDP DECLINE WILL CT SEE IN 2023? -0.8% WHICH INDUSTRY WILL ADD THE MOST JOBS? Manufacturing WHICH INDUSTRY WILL ADD THE MOST JOBS? Education and health services WHICH INDUSTRY WILL LOSE THE MOST JOBS? No industry will lose jobs; finance/ insurance will have slowest growth WHICH INDUSTRY WILL LOSE THE MOST JOBS? Business services Storm clouds hover over U.S., CT economies A s the U.S. economy con- tinues to flirt with a reces- sion in 2023, Connecticut will surrender some of the gains it has made in its ongoing recovery from the COVID-19 pandemic. Connecticut's economy showed steady improvement in 2022 as the state added about 39,000 jobs, cut unemploy- ment to 4%, and expanded real output by 1.7%, according to the most recent quarterly data. State GDP has returned to its pre-pandemic levels and jobs nearly so, though both remain shy of their 2008 high-water marks. The state's labor mar- ket is remarkably tight. Usually, unemployed workers outnumber available jobs; today there are three openings for every two jobless residents. Darker clouds are gathering on the horizon, and most econo- mists expect the U.S. to tip into recession in 2023, despite the fact the key markers used by the National Bureau of Eco- nomic Research to formally call a downturn are proving surpris- ingly resilient. Recession or no, the U.S. economy will almost certainly slow, perhaps to a crawl, amid climbing interest rates to tame inflation, lingering COVID kinks in global supply chains, and Putin's brutal war on Ukraine, which has roiled commodity markets. For Connecticut, that would translate into nonfarm job losses, rising unemployment and flat to negative GDP growth. Steven p. lanza Associate Professor in Residence; Author, "The Connecticut Green Sheet" university of ConneCtiCut

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