What’s Next for Connecticut’s Economy?
Economists speaking Jan. 5 at the annual Economic Summit + Outlook sponsored by CBIA and the MetroHartford Alliance agreed the national and global economies will flourish in 2018.
But the concern for the experts was whether that success will trickle down to Connecticut.
“2018 is going to be a really strong year,” said Ball, director of Quinnipiac’s Central European Institute.
“Ten years ago, we were talking about the new normal being this high-unemployment, low-growth world we were going to be living in for a long time.
“But it’s a steamroller now and it will continue to be. As the rest of the global economy picks up, that just drives it even more.
“It’s really reinforcing itself right now . . . It’s amazing.”
Coleman, a professor of finance at the Barney School of Business, cited the Trump administration’s relaxed regulatory climate, the recently passed federal tax bill, and “the awakening of the European economy” as three factors fueling the national and global economies.
“From a national perspective, we’re really at quite a unique point,” Coleman said.
“It’s as if all these things have come together in a perfect storm of good things that are going to turbocharge us into 2018,” Coleman said.
“Normally, we would expect the other shoe to drop about now but it’s not looking like that’s going to happen.”
Even Ball said he was mystified as to all the reasons for the chugging global economy.
“There’s still an unknown element driving positive expectations and growth,” he said.
Seven-plus years after the year of the recession, economic growth has expanded in the most of the country and the region.
Connecticut’s economy, however, continues to struggle, with the state yet to recover all jobs lost during the 2008-2010 economic downturn.
“Connecticut’s economy has been dragged along by the federal economy,” Gioia said.
“It’s not powering itself.”
The economists predicted Connecticut’s economy will grow in 2018 but not to the extent of the region and the country.
Connecticut's economy has been dragged along by the U.S. economy. It's not powering itself.
"There has been some growth in some areas," she said. "Financial services have seen a little bit of a pickup. We've seen job growth in different pockets, but no good signs."
"It's still tough here," Ball said. "But we have a lot of innovation and innovative start-up areas that are pretty exciting."
In fact, writing this month in The Connecticut Economic Digest, a state publication, DeJonge anticipates "modest growth," but nothing like other states will experience.
She said population loss is hurting Connecticut's economic potential, while panelists agreed that immigration reform could cause further damage to the state's economy.
"We must encourage educated people to stay and work in this country," Gioia said.
"It boggles my mind that we can bring these people over here, train them and educate them. They, in many cases, want to work here.
"But what do we do? We kick them out. That's insane."
"The growth that we've had in Connecticut is because of immigration—immigrants coming here to work," DeJonge said.
"If we change those policies to limit those possibilities, that would be detrimental to Connecticut’s economy."
The panelists also agreed that while Connecticut could benefit from any additional defense spending, several global issues could dampen the economic boom, including North Korea, ISIS, Iran, and the Middle East.
"Unrest in Iran and the situation with North Korea may not have an immediate effect on the Connecticut economy because most of its exports are to western Europe," DeJonge said.
"However, unrest in either of these areas could affect the national economy and trickle down to Connecticut."
Connecticut companies are stepping up to attract, train, and retain workers. That really is a positive thing.
"The biggest question marks are in trade and how we may back away from trade agreements," he said.
"If we do move to a more isolationist approach . . . it has long-term, negative consequences."
Federal Tax Bill
The panelists also expressed concern that the new federal tax bill could hurt Connecticut.
Ball said the tax overhaul will harm the state because people will move out.
Coleman said that while the tax bill may not hurt people living in Connecticut, it could create the optics that the bill is causing harm, which could discourage others from moving here.
She also warned that "tax bills always have unintended consequences, not all of which are positive," and wondered if the continued polarization among members of Congress will hamper economic growth.
Gioia agreed on the need for members of Congress to work together, noting the personal relationship between former President Reagan and then-Speaker of the House Thomas "Tip" O'Neill.
"Policywise, they were polar opposites. But they were friends, which enabled them to compromise on several issues," Gioia said.
"Interaction and civility are sorely needed."
Despite the reality of Connecticut's economy, the panelists saw some positive signs.
Gioia said most manufacturers he speaks with say they are doing well, although he said state lawmakers must do something to address the thousands of job openings Connecticut manufacturers need to fill.
Coleman said that when she speaks with her graduates now in the working world, they are far more enthusiastic about and engaged in their professions than students 10 years ago.
And that, to her, is a sign of improvement.
"I'm seeing how companies in Connecticut are stepping up to attract, train, and retain workers," she said.
"They are developed, mentored, and shown a career path. All these things create an exciting workplace and encourage them to stay in Connecticut.
"That really is a positive thing."
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