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30 HARTFORDBUSINESS.COM | JANUARY 12, 2026 ECONOMIC FORECAST | SCORECARDS Farhad rassekh Professor of Economics University of Hartford WHAT TYPE OF GDP GROWTH WILL CT SEE IN 2026? WHICH INDUSTRIES WILL ADD THE MOST JOBS? WHICH INDUSTRY WILL LOSE THE MOST JOBS? HOW MANY JOBS WILL CONNECTICUT ADD? WHAT'S YOUR 2026 ECONOMIC OUTLOOK FOR CT? WHAT WILL CT'S UNEMPLOYMENT RATE BE AT THE END OF 2026? Moderate Growth 2.8% 9,000 Hospitality & Health Care 3.7% Manufacturing Despite trade uncertainty, CT economy poised for steady growth in 2026 T he economy of a rela- tively small state such as Connecticut is intertwined with the national economy and, in particular, the economic policies of the federal government. The high tariff rates that the Trump administration had initially attempted to impose never material- ized. The actual tariff rates, although higher than before, turned out to be substantially below those that were initially announced. Moreover, businesses and investors have largely dismissed tariff-policy announcements due to frequent changes and backtracking. Conse- quently, because tariff rates have been lower than initially expected, both the U.S. and Connecticut economies have so far been largely spared the economic damage tariffs — which function as taxes — typically impose. As a result, Connecticut's outlook is stronger than it otherwise would have been. Absent unforeseen shocks, the state's economy should continue to grow at a solid pace in 2026, generate a respectable number of jobs, and keep the unemployment rate relatively low. WHAT TYPE OF GDP GROWTH WILL CT SEE IN 2026? WHICH INDUSTRY WILL ADD THE MOST JOBS? WHICH INDUSTRY WILL LOSE THE MOST JOBS? HOW MANY JOBS WILL CONNECTICUT ADD? WHAT'S YOUR 2026 ECONOMIC OUTLOOK FOR CT? WHAT WILL CT'S UNEMPLOYMENT RATE BE AT THE END OF 2026? Slower job growth, policy uncertainty cloud CT's 2026 economic outlook T he slowing labor market has complicated the Federal Reserve's effort to keep a lid on inflation without further weakening employment. Inflation remains stubbornly above the Fed's 2% target and has even inched back above 3%, largely due to Trump's tariffs, according to Fed Chair Jerome Powell. Meanwhile, U.S. job growth has fallen by half — from an average of 150,000 jobs per month a year ago to about 75,000 today. Job growth in Connecticut has slowed as well. Monthly employment gains dropped from roughly 1,300 in 2024 to barely 500 in 2025. Job open- ings fell to their lowest levels since the immediate aftermath of the pandemic, while layoffs jumped sharply. Private-sector hourly earnings, which outpaced inflation in 2024, stalled in 2025, making the cost of living increasingly difficult for households to manage. Such challenges are likely to persist in 2026. Fed watchers see the possi- bility of multiple rate cuts again next year, especially with the appointment of a more accommodative Fed chair. Lower rates could give the labor market some running room but also risk adding pressure to prices. Connecticut exports are also feeling the effects of policy uncertainty: the steady rise in trade volume hit a turning point at the start of 2025. Tariff volatility may ease now that the U.S. has reached trade deals with the European Union, United Kingdom, China and other partners, but these agreements are ever vulnerable to the president's erratic swings in direction. And Connecticut — 11th among states in its share of foreign-born workers and already grappling with declining labor force participation — is particularly exposed to the anxiety steven P. lanza Associate Professor in Residence, Editor of The Connecticut Green Sheet University of Connecticut Moderate Growth 1% 6,500 Health Care 4% Manufacturing surrounding the administration's mass-deportation policies. Expect the slowdown in job growth to carry into 2026, with annual gains slipping from about 10,000 in 2025 to roughly 6,500. Unemployment will continue to edge higher, though labor- force headwinds should keep it from rising much above 4%. Uncertainty on the trade front will add to the manufacturing sector's challenges, which includes finding skilled workers to fill open positions, but not enough to prevent real state GDP growth from remaining positive.