Processing Your Payment

Please do not leave this page until complete. This can take a few moments.

January 13, 2020

Rosengren: Amid CT’s challenges, take heart in low jobless rate, industry strengths

HBJ Photos | Matt Pilon Eric Rosengren on stage with CBIA CEO Joe Brennan at the business association's annual forecast event in Hartford.
By Matt Pilon

It’s true that Connecticut’s economic recovery from the recession that ended nearly 11 years ago has trailed most states, but perceptions about Connecticut tend to be overly dire, Eric Rosengren, president and CEO of the Federal Reserve Bank of Boston, said Monday in Hartford.

“In Connecticut, when I talk to business leaders, they tend to be more negative than the economic data, to be quite honest,” Rosengren said at the Connecticut Business & Industry Association’s annual Economic Summit and Outlook event at the Hartford Marriott.

A panel of state legislators, split between Democrats and Republicans, had just finished debating whether political rhetoric in Connecticut is overly negative, and if so, whether that’s hurting outsiders’ view of the state, which was recently named by the Federal Reserve Bank of Philadelphia as one of nine states at risk of economic contraction by the middle of this year.

In an interview after his keynote address, which focused mainly on the national economy, Rosengren advised taking  any economic predictions with a grain of salt.

“Economists aren’t very good at actually predicting downturns, and that’s true at the national level and it’s even more true at the state level,” Rosengren said. ”My own personal view is that Connecticut probably is not as susceptible [to contraction] as being on that list might imply.”

Connecticut has relatively strong defense and financial services sectors, and Rosengren said handwringers should also take heart in the fact that the state’s unemployment rate stands at just two ticks above the historically low national jobless rate of 3.5 percent, as of November.

Eric Rosengren, CEO of the Federal Reserve Bank of Boston, in an interview after his remarks at CBIA's annual forecast event in Hartford.

Of course, it’s “not all roses” for Connecticut, he’s quick to add. One major challenge he cites is the state’s inability to grow its population, which would spur economic growth.

The state’s population has shrunk for six consecutive years.

It’s a challenge shared by much of New England, but Rosengren notes one potential difference between Connecticut and other states in the region.

“When you look around the New England states, there tends to be a lead city that kind of attracts people,” said Rosengren, who didn’t mention Connecticut’s large debt load and legacy pension liability built up over a period decades.  

In Maine, that city is Portland, in Vermont it’s Burlington, in Rhode Island it’s Providence, and in Massachusetts, it’s the Boston area.

“You get to Connecticut and you have a bunch of small cities, but you don’t really have a city that’s growing quickly, that’s attracting a population tied, for example, to universities or other things,” he said. “It’s a bit more dispersed. So that’s a bit of a disadvantage.”

In addition, those small Connecticut cities tend to have above-average unemployment rates.

In a tight overall labor market, that combination makes workforce development -- building up worker skill sets to match employer needs -- increasingly important, Rosengren said.

Gov. Ned Lamont has staked out workforce development as a top priority. A newly revamped state council has just begun examining the issue.

“Ideally over time, a tight labor market will help bring some of those people (who live in small cities) back into the labor market,” he said. 

Rosengren gives less credence to concerns about rising state minimum wages hurting the economy. Half of the country, including Connecticut, is expected to raise the minimum wage this year.

Rosengren sees little evidence that state minimum wage hikes in recent years have been a significant problem for the economy in New England states.

Many employers already pay above their state minimum wage, and such increases would only become a problem if they get so high that employers seek to relocate or take other action, he said.

“I don’t think the minimum wage is so high in New England that that’s a particular problem, because we’re not seeing a high unemployment rate as a result of raising the minimum wage,” he said. “We actually have tight labor markets.”

“So if there was a time in the cycle to raise the minimum wage this would be the time to do it,” he added.

Sign up for Enews

Most Recent

Most Recent

Related Content

Thumbnail CBIA think tank releases recommendations to improve state business climate
Amid declining market, CBIA unveils new self-funded health coverage option for small, medium biz
Thumbnail Berkshire Bank expands private banking team 
Thumbnail Pegasus' DiPentima elected CBIA board chair

0 Comments

Order a PDF