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December 21, 2018

Steven P. Lanza: CT's slow growth will likely continue

Steven P. Lanza

Steven P. Lanza

Assistant Professor in Residence, University of Connecticut

Connecticut is on track to add more than 15,000 jobs in 2018.  That would be the state’s best performance since 2011, the first year of the recovery from the U.S. Great Recession.  

As of October, Connecticut has recovered 90 percent of the jobs lost in that recession.  The state will complete that recovery in 2019, if it adds the forecasted 11,000 jobs to its payrolls.

The improving employment picture is reflected in Connecticut’s low jobless rate, which is on par with rates achieved during the mid-2000s expansion.  But today’s labor force is bigger than it was then, so the state is setting records for the largest number of residents employed in history. The unemployment rate should continue to inch down next year to 4.3 percent.

State GDP growth, however, remains something of a sore spot.  At the current pace, real GDP will advance by barely 0.7 percent in 2018.  But some growth is better than no growth: The state has posted positive annual GDP growth just twice in 10 years.  The modest uptick in 2018 should be coupled with a comparable 0.6 percent increase in 2019.

The baseline forecast could gain a boost from some potential economic tailwinds. To date, there appears to be no sign of the U.S. economy flagging — the country could set a record next year for the longest expansion in history. And tight labor markets and rising wages could continue to fuel robust consumer spending. 

Closer to home, voters’ passage of the transportation fund lockbox could make more palatable the prospect of electronic tolling on Connecticut highways and generate the resources that would allow the state to make long-overdue investments in infrastructure.

Alternatively, the forecast could be hobbled by potential economic headwinds. U.S. tariffs could prompt retaliatory measures by our trading partners, prompting trade skirmishes, if not an outright war, which would dull GDP growth.

The ongoing Fed rate hikes threaten to crimp business investment and the current stock market swoon could deepen further. And there's always the risk that Connecticut's elected officials will once again fail to come to grips with the state's chronic budget shortfalls.

Return to HBJ's 2019 economic forecast landing page

What’s your 2019 economic outlook for Connecticut? Moderate growth
How many jobs will Connecticut add? 11,000
What will Connecticut’s unemployment rate be at the end of 2019?4.3%
What type of GDP growth will Connecticut see in 2019? 0.6%
Which industry will add the most jobs? Health care
Which industry will lose the most jobs?Government

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