Following national trends, interest rate hikes are having an effect on Connecticut’s housing market.While housing is often a harbinger of a recession, the risks of a severe national recession have lessened as inflation, while still high, has moderated from recent peaks.The Fed’s strategy on interest rates moderated economic growth throughout the U.S. However, the Fed […]
Following national trends, interest rate hikes are having an effect on Connecticut’s housing market.
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While housing is often a harbinger of a recession, the risks of a severe national recession have lessened as inflation, while still high, has moderated from recent peaks.
The Fed’s strategy on interest rates moderated economic growth throughout the U.S. However, the Fed will not need to be as aggressive in coming months as was feared in the summer of 2022.
This is welcome news as it suggests that any recession would be relatively mild and short; the “soft landing” pursued by the central bank is now the most likely outcome.
For Connecticut, a soft landing will slow employment growth in some sectors but not halt job growth or send us into negative territory.
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Additionally, current job postings are at record highs and unemployment is low so any slowdown is unlikely to cause a significant increase in the unemployment rate.
Connecticut was on track to add over 40,000 jobs in 2022, well above the 2023 forecast of 25,000. Manufacturing was particularly strong in 2022 with trends likely to continue in 2023.
It’s worth noting that much of the manufacturing employment in Connecticut is related to U.S. defense. Congress sets those budgets, making that industry less reactive to overall economic highs and lows.
Economic factors beyond state control, such as energy cost increases caused by current geopolitics, are vulnerabilities, hard to forecast and have impacted individual, municipal and state budgets. Connecticut’s underlying economy is strong and the state labor force participation rate remains above national levels.
