Connecticut’s economy will gain steam in the years ahead as the state adds 80,000 jobs from the fourth quarter of 2013 through 2018, according to economist Edwark Deak, who published an economic forecast in October for the New England Economic Partnership.
Still, that will put the state’s economic growth rate behind the U.S. average, Deak predicts. Connecticut won’t fully recover the approximately 119,100 jobs lost during the Great Recession until 2016, and slower than historical job recoveries are expected in the financial services, retail, construction, government and healthcare industries.
Meantime, the manufacturing and information sectors will show few if any net job gains, while casino positions will shrink as Foxwoods and Mohegan Sun face growing competition from gaming additions in surrounding states, Deak said.
Connecticut’s economic recovery, however, will gain traction in the next few years with the state adding 14,100, 25,100 and 23,300 jobs in 2014, 2015 and 2016, respectively. The state’s key economic challenges, according to Deak, include:
• The fact that Connecticut faces an estimated state budget deficit of approximately $1.4 billion starting in fiscal 2016. Approximately one-half of the shortfall will result from previously negotiated, mandatory pay increases for state workers.
• Two recent competitiveness surveys, by CNBC and Thumbtack.com have rated Connecticut as one of the lowest ranking states in terms of economic competitiveness and friendliness towards small business. While such surveys have their own limitations, the persistent low ranking for Connecticut raises a very large red flag that helps to explain the states paltry level of post-recession job recovery.
• Connecticut faces some serious demographic challenges. It has an extremely low rate of annual population growth, a long history of net outmigration, a very low level of household formation, and a 65-plus population that is the fastest growing age cohort in the state. In combination, these demographic issues hold considerable consequences for future labor and housing markets, entrepreneurship, the educational system, and health care.
• Infrastructure, including rail and highways, are in serious need of repair. Accidents and equipment breakdowns are common on the Metro North’s New Haven rail line that takes more than 125,000 commuters to and from work in lower Fairfield County and New York on a daily basis. Highway infrastructure is just as bad with Connecticut roads and bridges recently being rated as among the worst in the nation.
• Lastly, a recent Federal Reserve Bank of Boston study, using Connecticut data as a proxy for conditions in the New England region, found that poverty was a serious problem not just in central cities but in the suburbs as well. Family units totaling 181,000 had incomes less than $40,000 per year in Connecticut. Of those, 81,000 were located in the suburbs. The same report also contained a list of the most important challenges facing low-income families, with the lack of job opportunities being first on the list.
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