People are quitting their jobs—and that’s a good sign for the economy, says an official with the Federal Reserve Bank of New York.
When people feel more confident that they can find a better job elsewhere, says Joseph Tracy, executive vice president of the Federal Reserve Bank of New York [in picture, above], then they’re more likely to feel like they can make the break with their current employers.
And it’s happening more frequently, says Tracy.
Speaking at CBIA’s Midyear Economic Update at the Rocky Hill Marriott this morning, Tracy said that while workers are feeling more upbeat about their prospects, business confidence is still in a building stage.
Government has to play a part by creating “the right business climate” that will help businesses compete in the global market, said Tracy. Making state and federal governments more cost effective will give businesses the confidence they need to boost their competitiveness.
There are many ways to do that, said James Torgerson, chair of the Connecticut Regional Institute for the 21st Century, and president and CEO of UIL Holdings Corporation.
From long-term healthcare reforms to improving the state employee retiree benefits system, the Institute has outlined several ways Connecticut can save tax dollars and make government work better.
Next, the group is exploring better ways to consolidate and deliver government services, with a report due later this year.
“Our recommendations are being looked at, and progress being made,” said Torgerson, “but there is much more to do.”
Profits, jobs, taxes
Connecticut and the Northeast are in recovery, confirmed Ryan Sweet, senior economist for Moody’s Analytics. “When profits surge, jobs will follow,” he said, and businesses are very profitable right now and “sitting on top of a lot of cash.”
Translating those profits into more hiring, said Sweet, will depend on an important “missing link to jobs” -- business confidence.
He said that state’s fiscal problems are among the major factors holding back confidence. Given the fragile state of the recovery, he added, the last thing states should do is raise taxes.
If businesses continue to balk at what they are seeing coming out of statehouses, recovery could slip back into recession.
Data is showing an improving hiring picture, said Tracy. U.S. businesses are planning to hire more full-time workers, depend less on temporary employees, and give their employees more working hours. These factors and others point to a reawakening job market—and economy.
Overall, however, full recovery is still a long way off and there may be false starts along the way. That’s because this recent “Great Recession” was impacted by a severe financial crisis.
Traditionally, recoveries following similar crises are more likely to be more prolonged and roller-coaster-like than the sharper recoveries following recessions in 1981 and 2001.
A recent uptick in initial unemployment claims is an example of the kind of the uncertainty confronting policymakers—is it just a “soft patch” in the economy or arrival of a definite trend?
No matter what, the Northeast will lag the rest of the nation on jobs in the long term, said Sweet. That’s in large part because of changing demographics—more people and companies are moving to the South and West.
The U.S. economy “can’t stand another collision” such as what Europe’s debt crisis—now at a “boiling point” might create here. It’s already impacting our financial markets and could erode trade in particular and business confidence in general.
And if gasoline prices keep rising, added Sweet, the fragile recovery might take another setback.
For more information, contact CBIA’s Pete Gioia at 860.244.1945 or email@example.com.