Hartford Business Journal

www.HartfordBusiness.com decemBer 26,2016 • Hartford Business Journal 15 BOOK OF LISTS & ECONOMIC FORECAST 2016-2017 Nick Perna Economic Advisor, Webster Bank What's your 2017 economic outlook for Connecticut? Moderate to Slow Growth How many jobs will Connecticut add? 5,000 What will Connecticut's unemployment rate be at the end of 2017? 5.5% What type of GDP growth will Connecticut see in 2017? 1% Which industry will add the most jobs? Financial activities including real estate sector Which industry will lose the most jobs? Government Explain your 2017 economic outlook for Connecticut. Connecticut is struggling under the burden of chronic fiscal deficits. We have yet to fully digest the negative consequences of deficit-reduction actions for the current fiscal year and now find ourselves facing deficits for the next budget bien- nium starting July 1. My forecast for 5,000 jobs is actually an improvement over the past 12 months (through Oct. 2016) when jobs rose by only 3,200, which is a slim 0.2 percent — compared with a national gain of 1.7 percent. Next year's increase is mostly due to the somewhat faster economic growth expected for the nation. If that doesn't materialize, then Connecticut's growth could be even smaller. Unfortunately, there's no painless way to eliminate these deficits. However, over-reliance on taxes will cause the economic climate to deteriorate further and make it very difficult to get future job growth. What is needed is broad and deep reform of spending programs, starting with a complete overhaul of state employee retirement benefits. Also badly needed are reforms of the legislative/executive process such as including sunset provisions for major pieces of legislation and eliminating one of the redundant houses of the legislature to streamline decision making. In all candor, the uncertainties surrounding the Connecticut budget-setting process and economic policy formulation in Washington make it unusually dif- ficult to make forecasts at this time — especially about the future. Farhad Rassekh Professor of Economics, University of Hartford What's your 2017 economic outlook for Connecticut? Moderate Growth How many jobs will Connecticut add? 10,000 What will Connecticut's unemployment rate be at the end of 2017? 5% What type of GDP growth will Connecticut see in 2017? 0.5% to 1% Which industries will add the most jobs? Education and health care Which industry will lose the most jobs? High-tech manufacturing Explain your 2017 economic outlook for Connecticut. Connecticut's 2017 economic outlook appears to be grim just as it has been bleak in recent years. While the U.S. economy as well as the majority of states continue to recover from the Great Recession, Connecticut's economy lags behind in economic growth and job creation. Without a business-friendly environment, the performance of Connecticut's economy will remain mediocre in 2017. This grim outlook rests largely on economic policies at the state and federal levels. Our economic woes will likely worsen in 2017 if President-elect Trump carries out his protectionist plan. Although Trump aims to reduce imports and prevent outsourcing, such actions will inevitably hurt the export sector of the economy, and, as a result, Connecticut's economy will suffer because it greatly depends on exports. The heavy reliance on exports has significantly contributed to job creation and high wages in Connecticut. But if the new administration manages to reduce imports, the value of the dollar, which has recently risen, will rise even higher making U.S. goods more expensive abroad. To remain competitive, exporters will have to cut costs and reduce prices. Hence, they will lay off workers, move to low-cost areas, cut wages, or a combina- tion of these actions, all of which hurt Connecticut's economy. But regardless of federal policies, Gov. Dannel P. Malloy and the legislature should enact policies that encourage its residents and businesses to stay in Con- necticut. Our current policies do the opposite: They send people and businesses to other states.

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