According to University of Connecticut researchers, the state of Connecticut is soon to embark on a period of “stunning” economic growth.
The Connecticut Center of Economic Analysis, located in the UConn School of Business, recently released a report in the Connecticut Economic Outlook, a UConn publication, predicting 8.1 percent growth in the state economy in 2015.
If Connecticut’s economic growth follows the model put forth by the UConn economists, it would be three percent higher than the rest of the country. Economic growth could end up being more around five percent or six percent in 2015. In addition, the rosiest view of jobs in the report forecasts an addition of 44,000 jobs across the state.
Last year’s growth is expected to come out to a number near five percent, with conflicting reports saying that it will only grow 2.6 percent. While this year the economists anticipate record growth, 2016 is supposed to drop to three percent growth statewide.
The optimistic report is due in part to “the nearly unprecedented creation of 25,000 new jobs in 2014,” which the authors say clearly indicates that “Connecticut has been on what seems to be a powerful upward trajectory.”
The authors of the economic report stipulate that the reasons for the growth include “biotechnology, aerospace engineering, venture capital and a significantly more competitive environment.” Combined with lower oil prices, these companies and manufacturers have impacted Connecticut’s improving economic climate. Moreover, the report singles out Gov. Dannel P. Malloy’s successful mission to deliver The Jackson Laboratory, a nonprofit biomedical research organization, to Connecticut.
The new study directly contradicts doomsday reports from 2011-2014 that the Connecticut economy was stagnant and depleting the middle class, explaining that the economy has slowly crept towards this about turn.
As recently as 2013, economic growth in Connecticut was behind most of the United States, a country already growing at a slow rate. That year, Connecticut’s economic growth was less than one percent (0.9 percent), while the average for the rest of country was double Connecticut’s. Connecticut was last in the country in economic growth in 2013.
An article in New York Magazine in 2014 called Connecticut the “worst economy in America,” noting exceedingly high incomes, as well as increasing poverty.
In Connecticut, the article reads, “The average one percenter earns 41 times what the average 99 percenter does. That same multiplier is 24 in New Jersey, and just 12 in Hawaii.
Furthermore, lack of new jobs and increased growth were both looked at as what was bringing the Connecticut economy down. In 2010 the state had fewer paying jobs than in 1990.
One of the authors of the new report, Fred Carstensen, said that the Rell, Rowland, and Weicker administrations did not give “serious attention to economic development,” arguing that Connecticut hasn’t seen serious growth in 25 years. He also mentioned that, during Rell’s reign particularly, there was a four-year-long recession through 2011.
The Bureau of Economic Analysis argued that the main reasons for Connecticut’s stagnancy during this time were government austerity, the housing bubble and volatility in real estate and the financial service sector, including insurance. These problems seem to have been, if not fixed, lightened.
Still, critics, and even the authors of the report, are unsure of Connecticut’s bright future. An increasing state budget deficit, borne out of amending austerity, must be curtailed if the state hopes for continued growth, according to the UConn economists.
Hearkening back to the troubles spoken to in the New York Magazine article, UConn’s economists ask: “If and how Connecticut’s high-income status…can be maintained?”
Insufficient public sector investment, ignorance of economic opportunities and low-quality data could all be reasons for Connecticut’s economy to become stagnant again, according to the report.