U.S. economic outlook stable; CT's stagnant

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By Don Klepper-Smith, Chief Economist and Director of Research, DataCore Partners LLC; Economic Advisor to Farmington Bank

U.S. economic data suggests that the modest economic recovery is likely to continue through at least the end of 2017 and possibly longer. The odds of a full-blown domestic recession over the next 12 to 18 months are low.

However, the outlook for 2018 is clouded with uncertainty, but will be a function of: proposed tax cuts, emerging trade policies and possibly a new wave of protectionism, and proposed rollbacks of federal government regulations, which hopefully will seek to spur new business investment.

With political gridlock in Washington and reduced odds for another fiscal stimulus package, or an infrastructure bill, chances are that monetary policy will continue to err on the side of caution, meaning a more tempered rise in short-term rates from the Federal Reserve.

The Connecticut economy will see little to no growth in 2018.

The good news is that Connecticut finally has a budget that was passed with bipartisan support. In addition to avoiding income and sales tax increases, this budget includes an improved spending cap, a strong cap on borrowing, new rules on required votes for union contracts and changes to binding arbitration.

Mounting fiscal problems have finally prompted policymakers to take a hard look at the structural problems underlying the state's economy. This is a big first step in Connecticut's path to fiscal discipline.

However, there's clearly been an escalating crisis of confidence in Connecticut's business community that's been long ignored, and it's not going to turn around quickly.

SCORECARD

What’s your 2018 economic outlook for Connecticut?

Slow Growth

How many jobs will Connecticut add?

4,500

What will Connecticut’s unemployment rate be at the end of 2018?

5.5%

What type of GDP growth will Connecticut see in 2018?

0.5%

Which industry will add the most jobs?

Health care and education

Which industry will lose the most jobs?

Manufacturing, retail trade, leisure and hospitality

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