Wait another six to nine months, says Moody’s Analytics Senior Economist Ryan Sweet, and you’ll see the U.S. economy shifting into higher gear.
Until then, however, expect something more like neutral.
Sweet and several other economists spoke at CBIA’s The Connecticut Economy Conference in Rocky Hill this morning, co-presented by the Barney School of Business at the University of Hartford, and Hartford Area Business Economists.
Businesses are still uncertain about the economy, he said, and “when businesses are worried, they don’t have the confidence to hire.”
Witness the latest U.S. jobs numbers showing that the economy added 96,000 jobs in August—but another 368,000 people dropped out of the labor market.
News like that underlined Sweet’s prediction that the economy won’t exactly move forward, but will go “more sideways for the next six to nine months.”
However, Sweet was optimistic that pent-up consumer demand for housing and vehicles, for example, "is going to be unleashed in the second half of 2013," getting us out of neutral and into gear again.
Some of the most encouraging news was contained in the results of the CBIA/BlumShapiro 2012 Survey of Connecticut Businesses, which were revealed at the conference.
Business profitability is starting to increase again and hiring is also on the uptick in the state, according to the survey.
“Our state economy is making progress on many fronts, including manufacturing and education reform,” said Tom DeVitto, chief marketing officer for BlumShapiro. But more work needs to be done “to create a more favorable business climate if we expect Connecticut companies to stay here and thrive.”
While the panel of experts asked the more than 200 gathered businesspeople for patience as the economy rumbles along, they also asked state policymakers to put a little more “oomph” into their efforts in “creating a winning environment” for businesses, said Nick Perna, economic advisor to Webster Bank.
A positive business environment, he said, has “predictable” tax policy, and a commitment to paying down the state’s monumental indebtedness.
And since confidence is key, added Perna, lawmakers should “bring down the cost of doing business in Connecticut and do it in a way that, six months from now, [the state] won’t be coming back after them again.”
Steve Lanza, executive editor of The Connecticut Economy, A University of Connecticut Quarterly Review, also cautioned that it’s also important to create a business environment “that’s good for all businesses, not just targeted, favored businesses.”
Investing in innovation
On the other hand, Lanza said that the luring of The Jackson Laboratory to Connecticut is part of the creative investing in innovation the state must do.
With Jackson Lab, Connecticut is “really building our intellectual infrastructure” that should attract more companies—and jobs—to Connecticut.
“If we don’t [do these kinds of deals],” said Lanza, “we risk losing out to other states that are thinking outside the box.”
Other panelists identified some of the significant roadblocks to a better business climate.
“We have to tackle our tax and regulatory issues,” said Susan Coleman, professor of finance, Barney School of Business, University of Hartford, “which tend to make Connecticut less attractive for business.”
And it should be bipartisan tackling, she added. Progress made in the 2011 Jobs Session is a good model for what can happen when both sides of the aisle come together.
A matter of degree
Alissa DeJonge, director of research in the Connecticut Economic Resource Center, said that surviving the recession and recovery is often a matter of degree—educational degree, that is.
“College has proven to be the best umbrella in this economic storm,” she said. DeJonge said unemployment rates were highest (24%) for those people with only a high school degree, and lowest (6.8%) for those with four-year college degrees.
Her comments inspired a long and spirited discussion among the speakers and attendees about the achievement gap in Connecticut and how to close it.
Without a highly skilled workforce, was the consensus, Connecticut's economy--and people--will always be at risk.