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12 | HARTFORD BUSINESS JOURNAL • DECEMBER 26, 2017 ECONOMIST SCORECARDS Here is a quick snapshot of what five Connecticut economists and business professors think will happen to the state's economy in 2018. Alissa K. DeJonge Vice President of Research, Connecticut Economic Resource Center Inc. Steven P. Lanza Assistant Professor in-Residence, University of Connecticut Private sector will continue to lead job growth You'd never guess it from the headline news of a protracted state budget crisis and exodus of corpo- rate headquarters, but Connecticut reached a jobs milestone in 2017. Even assuming no further job growth in the final months of the year, the average annual private sector job count will top 1,453,000 — a new record for the state. The fact that the state has yet to recover all the jobs lost during the Great Recession reflects drag forces from the public sector, not lack of trying by private enterprise. 2018 is an election year, with the statehouse and all General Assembly seats up for grabs. Presumably, elected officials will be on their best behavior to avoid another fiscal train wreck, which could only bode well (or better at least) for the broader health of the economy. Expanding global markets and low commodity prices will add tinder to the U.S. and Connecticut econ- omies. But in this Land of Steady Habits, the favorable backdrop will likely translate into more of the ponder- ous growth we're far too used to. Expect Connecticut to add about 6,500 jobs in 2018 — a bit faster pace than we've seen in the past couple of years, but only half the gains achieved in the initial years of recovery from the Great Recession of 2008. The unemployment rate will inch down, too, but not by much: from about 4.7 percent in 2017 to 4.5 percent in 2018. The catchall "other services" category will lead the industries in job gains. This group includes a hodge- podge of difficult-to-classify service jobs — personal care, pet care, dating services and much more — that are often the province of enterprising entrepreneurs, who by their efforts remake the structure of the econ- omy. Don't expect many new government jobs, however, as the struggle continues to get the state's fiscal house in order. That rebuilding will become even more chal- lenging should reasoned deliberation fail and federal lawmakers enact a blue-state income surtax. Changing retail landscape, state politics to impact economy in 2018 There are many industry trends that will affect Connecticut's economy in 2018 leading to slow to moderate growth. Consumers are not spending less on goods and services, but the meth- od in which they shop has changed. The rapid growth of e-commerce has increased demand for warehouse space and fulfillment centers in locations that give ca- pacity to respond to online orders and deliver products quickly. There is also a change in consumer prefer- ences away from purchasing durable goods such as heirloom furniture, particularly as young professionals prefer to rent apartments rather than buy houses, and toward experiences such as vacations and going out to eat. Traditional storefront retailers that remain solvent during this transition will adopt a hybrid approach of retaining less inventory on-site and enhancing the shopping social experience. There are some higher-end retailers that are already making this transition well, and if more can join in, it will mitigate employment losses. A recent Credit Suisse report projects that more than 8,600 U.S. retail stores will close in 2017, which would be more than the number that closed at the height of the 2008-09 financial crisis. The need to be nimble is also a must for the insur- ance industry, which is why mergers and acquisitions are on the rise. Deloitte sites long-term trends that require insurers to be innovative to stay ahead of changing conditions, including the increased threat of cyberattacks. Employment for defense manufacturing continues to be strong, as Electric Boat fulfills its ongoing federal contract for five new submarines. On the other hand, local government employment will remain flat or decrease as municipalities deal with the realities of different funding amounts from state government. Statewide politics in 2018 will influence the econ- omy. Currently there is a shift in decision-making power away from the executive branch and toward the legislative branch, with our current governor not running for re-election. The outcome of the statewide gubernatorial elec- tion may provide much change in 2019 and beyond, depending upon the dominant parties in the executive and legislative branches. What's your 2018 economic outlook for Connecticut? Moderate Growth How many jobs will Connecticut add? Approximately 5,000 What will Connecticut's unemployment rate be at the end of 2018? 4% What type of GDP growth will Connecticut see in 2018? 3% Which industry will add the most jobs? Wholesale/ logistics Which industry will lose the most jobs? Retail What's your 2018 economic outlook for Connecticut? Moderate Growth How many jobs will Connecticut add? 6,500 What will Connecticut's unemployment rate be at the end of 2018? 4.5% What type of GDP growth will Connecticut see in 2018? 1.1% Which industry will add the most jobs? Other services Which industry will lose the most jobs? Government