January 11, 2019

New Haven = Cambridge, Part II

PHOTO | MIichael C. Bingham
PHOTO | MIichael C. Bingham
Traynor: desperately seeking smart people

Over the last decade Connecticut's economic recovery from the recession of 2008 has lagged its region and by any measure been among the weakest in the nation.

That much is inarguable — the numbers don't lie. What to do about it is where smart people can and do disagree.

One of those smart people is People's United Bank Executive Vice President and Chief Investment Officer John S. Traynor, who spoke to the New Haven Manufacturers Association during a Thursday morning confab on Quinnipiac University's York Hill campus.

Traynor has become the region's go-to soothsayer for macroeconomic trends and government actions that most impact economic performance by the private sector.

His talk was titled "Investing at the Intersection of Main Street, Wall Street and Pennsylvania Avenue," but its focus was investing writ large — not just private investors but business owners such as the manufacturing executives in the room in search of guidance about whether and when to contemplate large capital investments that can sometimes amount to do-or-die decisions for small and family-owned firms.

In December Traynor told an assemblage of business people at the Greater New Haven Chamber of Commerce's annual economic-forecast confab that if Connecticut were to begin to keep pace with its New England neighbors in economic performance, it would most likely be New Haven reprising its historic role as a hub of innovation and entrepreneurship that would fuel the state's belated acceleration into the recovery fast lane.

On Thursday Traynor reiterated that theme. New and existing companies — including behemoths like GE and Amazon — are drawn to places with "high concentrations of smart people," Traynor said. "The industries and jobs of the future will demand greater levels of human capital," he said.

The Engine That Could

A major factor in Massachusetts' far outpacing Connecticut in economic performance since the recession — posting real GDP growth of 16.4 percent versus the Nutmeg State's decline of 9.1 percent between 2007 and 2017 — is the Bay State's engine of innovation and technology commercialization: Cambridge, home to Harvard and MIT.

For Connecticut to catch up, assembling that brain power is actually the easy part, Traynor said. It already exists — in New Haven. The key for Connecticut is to find ways to bring the innovations germinated at places like Yale to fruition and eventually to market — and to produce those products in Connecticut, and not South Carolina.

"New Haven can be that engine, folks," Traynor said. "It's not going to be Hartford; it's not going to be my town of Fairfield.

"If we can figure out how to hold onto those smart ideas from New Haven and produce those great tools, those great products, in [for example] Milford, in the state, then I think that's the key."

The other key to restoring long-term economic vitality to Connecticut is to keep young intellectual and entrepreneurial talent from leaving the high-cost, high-tax state in which they grew up or went to college for greener pastures elsewhere.

Oh, yes — and the economic prediction part. Nationally, tax cuts in 2018 injected nearly $1 trillion into the U.S. economy — an adrenaline rush that won't be duplicated in 2019. Indeed, after posting real GDP growth of about 3 percent last year, Traynor forecast a GDP growth rate in the range of 2.3 to 2.5 percent for 2019.

Beyond that, the probability is high, Traynor added, that the U.S. economic slowdown of 2019 will be followed in 2020 by a recession.

Happy New Year!

Contact Michael C. Bingham at mbingham@newhavenbiz.com

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