Capitol Connection: Is the Economy Warming Up?

January 22, 2014

Last week I alluded to the notion that Connecticut’s economy is warming up. I do not profess to have a crystal ball, nor do I have a trading account on Wall Street, but I do have some insight on Connecticut’s finances after attending an economic summit earlier this month.

At the Connecticut Business and Industry Association/MetroHartford Alliance Economy Summit, two economists presented recent findings on Connecticut’s business economy. Webster Bank Economic Adviser Nicholas Perna and Federal Reserve Bank of Boston President Eric Rosengren said that while the rest of the U.S. economy has rebounded, Connecticut remains on the forward track, albeit in slow gear.

According to the economists, our GDP is expected to increase from 2 percent in 2013 to 3 percent in 2014 with our unemployment levels expected to drop to 6.5 percent. Inflation levels are expected to remain low at around 2 percent or lower.

At the meeting, I also learned about some interesting facts regarding our economic overview.

Did you know that Connecticut’s skilled workforce generates a gross state product per capita that is 28 percent above the national average? This means that if Connecticut were a country, it would rank as the seventh most productive in the world, according to the economists.

We also have the healthiest residents in the nation (The Measure of America 2013-2014) and our poverty rate is 34 percent below the national average (2013 U.S. Census data).

This all begs the question, why is Connecticut one of the most indebted states in the nation? Why is the social services portion of our budget so large if our poverty is so much lower than the national average and one of the lowest in New England? These two numbers are almost contradictory in measure.

While the economy may be moving in the right direction, we also cannot ignore the fact that we will be facing a large deficit in 2016. And, as the economists highlighted, the state cannot rely solely on borrowing money to fix the budget.

At the conclusion of the summit, one of the economists summarized our predicament with words to the wise, “We are moving forward, as long as the legislature doesn’t mess it up.”

I wish it was mandatory for all legislators to have attended the presentation. We all need to be aware of these numbers, and the directions we can take to stay on the right path. For the sake of our economy, we cannot mess this up.