NOTE: Click here for an updated version of this post — but look at the chart first.
Connecticut’s economy will build steam in 2014 and 2015 with healthy if not spectacular job gains, but will continue to lag the nation and the New England region, a new forecast shows.
Chart shows predicted job changes by percent.
Courtesy of New England Economic Project
The reason for Connecticut’s gains is simple: A rising national economy, which is expected to add jobs at nearly twice the rate of Connecticut in the next few years, will bring this state along in its coattails.
And the reason for Connecticut’s continued sluggishness, Deak said, is the same as what we’ve grown accustomed to seeing: High energy costs, constrained land use and, mostly, no great engine of growth, despite stirrings from the state-sponsored biotech industry.
Headwinds include continued restructuring in finance, especially as interest rates rise as expected; and competition for the casinos in neighboring states.
Manufacturing is forecast to remain flat or lose jobs. The traditional factory strength, defense, will be bolstered by the latest jet fighter for the Pentagon, though that program is advancing more slowly than planned in part because of the federal sequester.
“It’s quite clear on the basis of what the Department of Defense is doing here that they want to see the F-35 go forward, plus that’s going to be a big export item,” Deak said Wednesday, ahead of the economic partnership’s Boston conference scheduled for Thursday.
Unemployment, which should average 7.9 percent in 2013, is forecast to drop to an average of 7.5 percent in 2014, then 7.1 percent in 2015. It will reach 6.4 percent in 2017, Deak predicts, and even that number is well above the 4 percent to 5 percent levels of earlier boom times.
All of the predicted figures for Connecticut are weaker than those of the rest of New England and well below that of the nation. But Connecticut doesn’t need fast growth, some experts say, because it’s adding population more slowly.
Deak, in fact, predicts that the total number of people working or actively looking for work — the labor force — will rise by about 20,000 people over the next three years, which would be good for job totals but would temper the decline in the jobless rate.
The best year upcoming is clearly 2015 in the forecast, as job totals return to a semblance of boom times and home construction reaches 8,500 new units, from a 2011 low of 3,000. But the job totals won’t return to the pre-recession high of 1,713,000 until mid-2016, and the home construction levels will not return to their 2005 peak of 11,000, let alone the heady buildups of the 1980s.
As decent as the numbers look in 2014 and 2015 — both years well north of 1 percent job gains — Deak pulled them back from much higher baseline forecasts for Connecticut by Moody’s Analytics. Under the New England Economic Partnership model, Moody’s projects numbers for each state based on the U.S. economy, and the state managers adjust based on local conditions.
Moody’s forecast gains of 25,000 jobs in 2014 and a wild and crazy 35,000 for 2015 before Deak made his adjustments.
All of this crystal ball stuff is just that, as Deak and the partnership turned out to be way off last year, when they predicted a disaster resulting from the sequester. But barring unforeseen events, the direction of things seems clear: The 2014 economy might help Gov. Dannel P. Malloy in his re-election effort, and if he can win, he’ll be able to claim credit for more gains in 2015.