On January 21, the Chamber welcomed CT State Comptroller Kevin Lembo and economist John Traynor for a virtual Business Breakfast, providing updates and insights on the state’s economic trends.
Undeniably, the COVID-19 pandemic impacted state finances and the local economy, but the forecast included some positive indicators.
“Last fiscal year… was a bit of rollercoaster for us just as it was for all of you,” said Mr. Lembo. Rather than a typical economic slowdown, the state went from a deficit somewhere between $100-200 million to near $1 billion in 30 days. “It’s really like the breaks got jammed on, and we went through the windshield.”
Through spending restraint and federal relief, the state ended the fiscal year with a small surplus, Mr. Lembo reported.
Mr. Lembo discussed the mechanism that directs dollars into the “rainy day fund,” which built to a $3.1 billion reserve and led bond rating agencies to put CT near the top of state’s prepared to handle the pandemic’s impact. He indicated the need for a larger conversation around the model regarding adaptable versus fixed thresholds.
John Traynor, Executive Vice President, Chief Investment Officer for People’s United Advisors, provided insights on economic trends and what they may mean for businesses going forward.
Providing analysis across a series of charts and graphs, Mr. Traynor stated there are good indications the economy has hit bottom and will be moving ahead.
Rebuilding consumer and business confidence, which is essential to bouncing back, will require successfully managing the pandemic through vaccines. Mr. Traynor noted that 70% of U.S. GDP is in the service industries, the greatest job losses have been felt there, and its recovery depends on consumers being comfortable with activities like travel and dining. Along with these industries being hit hardest, wage inflation reflects significant lower wage job losses, particularly in the hospitality sector.
Encouraging signs include stability in high tech manufacturing, a significant jump in new business formations, and rising house prices. Stimulus is contributing rising projections for GDP, now anticipated at 4.7%. Mr. Traynor discussed in more detail indicators related to the economic cycle, tax impacts, and the stock market as part of a Connecticut-focused view of the national economy.
To see the full presentation and garner expert insights on economic trends, access the recording through the Chamber by registering here.