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December 28, 2020 Economic Forecast

CT poised for a strong economic rebound

By Patrick J. Flaherty


Connecticut suffered huge job losses in March and April 2020, but has added jobs each month since. Nevertheless, nearly every industry is likely to be below pre-pandemic levels at the end of the year.

Assuming a successful distribution of an effective vaccine, pent-up demand for services that were delayed or avoided during the pandemic (such as routine medical procedures) will lead to a spike in employment in late summer or early fall 2021 – strong growth compared to the depressed 2020 level and moderately better than 2019.

Employment in accommodation and food services will be strong as consumers return to normal patterns of dining in restaurants and socializing. The smaller arts, entertainment, and recreation sector will see a similar rebound.

On the other hand, the pre-pandemic trend of retail sales shifting from in-person stores to delivery accelerated during the pandemic. These trends will not reverse although the 2021 holiday season will see strong sales.

The relative weakness in retail will be offset by continued strength in warehousing and delivery employment.

Patrick J. Flaherty, Assistant Director of Research, Connecticut Department of Labor.

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2 Comments

Fred Carstensen
January 22, 2021

Recovery in low-wage, low-skill areas--to which Flaherty points--are NOT recovery. It is a continuation of Connecticut's long-term decline and loss of competitiveness. CT never recovered post-2008, after enjoying about the highest per capita growth rate in the nation 1997-2007. In February 2020, CT's economy was about the size in had been in 2006; employment was still 17,000 below the previous peak. More concerning, after a single year of strong recovery (2014-2015), the rate of growth steadily fell and was significantly below the national rate. While our neighboring states did very well post-2008, well surpassing their previous peak in real output and employment, CT went in reverse, from first to last. Critically, CT disconnected from the data-driven, digitally dependent modern economy. Flaherty points to job creation in low-wage, low-skill sectors; he fails to acknowledge the systematic, long-term, steady loss of high-wage, high-skill jobs. Central to that dynamic has been the absence of growth in the single most important occupations--those in IT. There will be no meaningful recovery in CT until it reconnects with the modern economy.

Anonymous
January 4, 2021

In this short uplifting article, you did not address vacant malls and permanent restaurant and retail closures. Secondary travel roads are a travelog of For Rent and For Sale signs lining both sides of the street. Commercial real estate is in crisis in CT and will continue to soften. When one sees vacancy, one is not as motivated to start a new business.

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