Forecasters say: CT's economy to keep improving, fewer federal pitfalls
By Steve Smith - Staff Writer
Statewide - posted Fri., Jan. 10, 2014
The economic forecast for Connecticut in 2014 is that the state will continue to see slow growth, and won't be hindered by the national economy. That was one of the prevailing thoughts at the Connecticut Business and Industry Association's Economic Summit and Outlook in Hartford on Jan. 7.
Dr. Eric Rosengren, president & CEO of the Federal Reserve Bank of Boston, said that his predictions are more upbeat than they have been in six years, but that the national economy is still far from where he'd like it to be. He said the economy should grow closer to 3 percent this year, up from an average near 2 percent for the last several years. The effects of the “sequester,” debt ceiling scares and the tax increases last year were a drag on the economy, but those effects have dissipated for 2014, and consumer confidence has shown steady growth, he said.
“The good news is we actually have a government budget right now that does not look like we're going to have the dysfunctional discussion about the federal budget,” he said. “I'm actually hoping the fiscal discussion won't be a drag on the economy. That tends to have an impact on consumer confidence. Right now, we're starting a positive trend, and I hope that continues.”
What can hold things back is the fact that unemployment numbers, while declining, have been too high for too long.
“That obviously has an impact on the person who is unemployed,” Rosengren said, “but it also has implications on the economy. When people leave the workforce, we're not as productive an economy as we otherwise would be, so some of the damage to the labor markets extends well beyond the time when the economy gets to full recovery.”
Dr. Nicholas Perna, economic advisor to Webster Bank and noted economic forecaster, agreed that the Connecticut economy is looking up and won't be held back by the U.S. economy.
“I believe the U.S. economy is on an upward trajectory,” Perna said. “It's one of the few times over the last couple of years where the cards – the hands – that we've been dealt, nationally and locally, are actually pretty good. Last year, we were worried about the fiscal cliff. It was disaster after disaster. Whether it materialized or it didn't, it made people worry. It made businesses pull back, and made consumers pull back. This year, we don't have much of that.”
Perna said several economic analysis reports from the University of Connecticut said the shenanigans in Washington had cost the state about 20,000 jobs. Perna said that he wasn't sure whether that was accurate, but it is certainly attention-getting, along with reports that the state's unemployment rate figures were a “smokescreen” hiding the number of those who have stopped looking for work or left the workforce.
“Things aren't great here in the Nutmeg State, but they're not as bad as some make them out to be,” Perna said. “Employment in the state of Connecticut was up by 15,000 last year. Impressions were that we went nowhere, or that we went down. We're not back to where we were before, but at least we're moving up. Maybe not enough, but we're moving up.”
The outlook, Perna said, is that jobs will grow another 15,000 to 25,000 in 2014 and another 25,000 to 30,000 in 2015. He added that jobs are a clearer number than unemployment, and that income should follow, with incomes rising by as much as 6 percent. Also, the increases in jobs and employment should also translate to personal bankruptcies dropping to half of what they were at the peak of the recession.
“There's a pretty good base for improvement of the state economy,” Perna said.
Rosengren said the economy in New England made it less susceptible to the economic downturn than other regions that were more dependent on real estate, such as California, Florida and Nevada, but was also affected by the cuts in defense and healthcare spending.
“We're doing better than the nation as a whole,” he said. “We're reasonably well-situated. We have a workforce that's highly skilled. We have a lot of people with higher education, which means we don't have the very high unemployment rates we see in other parts of the country, but we're still not getting that unemployment rate down as low as we'd like.”
CBIA President and CEO John Rathgeber agreed that the national economy is showing good “vital signs” and that Connecticut is seeing progress, including the unemployment numbers falling and a more stable state budget, and said the state has made several improvements that will have long-term benefits.
“Connecticut, in my mind, is a great state, and will continue to be a great state with tremendous potential,” Rathgeber said. “We are blessed with an array of world-class companies of many sizes and in many different industry sectors. These companies are national leaders when it comes to providing good wages, benefits, safe workplaces, and, very importantly, staying committed to their local communities.”