Everyone knows that businesses don’t like uncertainty, but in the latest issue of CT Economic Quarterly, University of Connecticut economist Steven Lanza measures just how much debt ceiling and sequestration fights have hurt the state’s economy.
Lanza said the inability of lawmakers in Congress to resolve such disputes — which led to a partial shutdown of the federal government in October — has deprived Connecticut of an average of 20,000 jobs since 2012 and also added half a point to its unemployment rate.
The state has only recovered a bit more than half of the 120,000 jobs it shed during the latest recession, or 4,600 per quarter.
“Uncertainty, then, has cost Connecticut a year’s worth of employment recovery,” Lanza wrote.
He used an uncertainty index model developed by Stanford economists to measure the impact on Connecticut. The model counts news stories about uncertainty, tax provisions set to expire over the next decade and diverging predictions on inflation and government spending.
If Congress can resolve its budget and debt ceiling disputes in the coming months, the state has a good chance of adding more jobs in 2014 than it has in any of the previous four years, Lanza said.
Economists expect somewhere between 2.5 percent and 3.5 percent GDP growth in 2014, which could mean 20,000 or more added jobs in Connecticut.
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