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2018 Economic Outlook

presented at the North Haven EDC Breakfast 4/12/18

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About CERC CERC drives economic development in Connecticut by providing

research-based data, planning and implementation strategies to foster business formation, recruitment and growth.

Private, nonprofit organization; founded in 1992

Funded by utility and telecommunication companies, state contracts, and fee based services

Provide research, municipal, business, real estate, and marketing services

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Presentation Outline Global Trends National Trends Connecticut Effects North Haven Changes

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Percentage of World GDP 27.6%

4.8%

10.0%

24.3%

14.9%

5.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

2005 2015

Source: World Development Indicators Database, World Bank, Feb, 2017

(GDP in Current U.S Dollars)

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World Output Estimates

0

1

2

3

4

5

6

7

World U.S Euro Area Canada Japan U.K EmergingMarket

China Low income

2016 2017 2018Source: World Economic Outlook, October 2017

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U.S. Tax Reform Provides Slight Lift to Economic Growth

• Lower rates on corporate and personal income should increase business investment and consumer consumption during 2018.

• Anticipated employment gains and wage growth

• As inflation remains close to 2 percent target and labor situation improves, federal funds rate is projected to rise gradually, perhaps to 1.75 percent by 2018 Q3.

• However, after tax reform boost, business investment is expected to slow, along with labor force growth, which will lower consumption later in the year and into 2019.

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Property & Casualty Insurance: Adapt

Traditional insurance models need to adapt to: • Fewer insurable workers due to robotic automation of industrial processes • Sharing economy will shift insurance policies more toward commercial • Fewer home owners, more renters

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Retail: The Experience

Physical stores: Experiences that make the customer feel relaxed and comfortable lead to increases in sales and a clear differentiation from the online experience.

Online Stores: In addition to offering faster delivery times, online businesses have formed partnerships with stores for pick-up and return options.

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Warehousing Rapid delivery Smaller packages Variety of goods

VS. Large number of same goods on pallets

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Financial Services

User friendly online interface

Fewer/no local bankers

International expansion

New trends:

Longer-term goals: Enhancing cyber security

Responding to breaches in a transparent and

customer friendly way

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Manufacturing: Automation

• Automation and robotic technology becomes more widespread for manufacturing businesses

• Will cause disruption or displacement of jobs but will also will create approximately 15 million new jobs in the U.S. over the next ten years

A fundamental economic transition

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Construction – Slow Growth ADVANTAGES OFFSET BY CHALLENGES

Technology advancements: -Drones, self-driving vehicles, visualization Software and hardware

Increased costs in raw materials and labor

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Healthcare

• The cost of health care and medical

procedures continues to grow

• Major focus of the industry is figuring out

ways to reduce costs without

compromising quality of care

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Source: CT Department of Labor

CT 2016-2017 Employment Change

-2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0%

Information

Government

Leisure And Hospitality

Trade, Transportation, Utilities

Manufacturing

Construction, Natural Resources & Mining

Other Services.

Professional & Business Services

Education And Health Services

Financial Activities

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CT Median Household Income

$65,000

$66,000

$67,000

$68,000

$69,000

$70,000

$71,000

$72,000

$73,000

2010 2011 2012 2013 2014 2015 2016

Median Household Income

Source: U.S Census Bureau

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CT Population by Race

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Two or more races

Some other race alone

Native Hawaiian and Other PacificIslander alone Asian alone

American Indian and Alaska Nativealone Black or African American alone

White alone

Source: U.S Census Bureau

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CT Native vs. Foreign Born

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

2010 2011 2012 2013 2014 2015 2016

Native Foreign Born

Source: U.S Census Bureau

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Source: U.S Census Bureau

CT Population by Age

32% 32% 32% 31% 31% 31% 31%

33% 33% 33% 32% 32% 31% 31%

28% 28% 29% 29% 30% 30% 31%

7% 7% 7% 7% 7% 7% 7%

2010 2011 2012 2013 2014 2015 2016

Below 25 25-49 50-74 74 and over

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Source: Federal Reserve Economic Data

CT Resident Population

3460

3480

3500

3520

3540

3560

3580

3600

3620

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Resident Population in CT

Resident Population in CT

In Thousands

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Source: Connecticut’s Population and Migration Trends: A Multi-Data Source Dive, CT Office of Policy and Management, 2016

Components of Population Change Pre- and Post-recession

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

Births Deaths Net InternationalMigration

Net Domestic Migration

2004-2007 Average 2013-2016 Average

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Source: U.S Census Bureau

CT Housing Permits 2010-2016

-1,500

-500

500

1,500

2,500

3,500

4,500

5,500

6,500

2010 2011 2012 2013 2014 2015 2016

1 Unit 2-4 Unit 5 + Units Demolitions Net Total

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North Haven: Population by Age

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2016201520142013201220112010

75 and over

65-74

55-64

45-54

35-44

25-34

15-24

Under 15

Source: U.S Census Bureau, Census Tract 160272

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North Haven: Population by Household Income

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015 2016

Over $150K

$100K-$150K

$50K-$100K

Under $50K

Source: U.S Census Bureau, Census Tract 160272

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North Haven: Population by Education

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2012 2013 2014 2015 2016

Graduate or professional degree

Bachelor's degree

Associate's degree

Some college, no degree

High school graduate

Less than 12th grade

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Amazon in North Haven “…We’re excited to open a new, state-of-the-art fulfillment center in North

Haven, creating more than 1,500 full-time jobs that offer wages 30 percent

higher than traditional retail roles and include comprehensive benefits on day

one, bonuses and stock awards,…”

-Akash Chauhan,

Amazon’s vice president of North America operations

Source: ct.gov Press Release

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Conclusions • Projections for global and national economic growth are positive. • Estimate for Connecticut’s economic performance in 2018 is

modest. • Overall industry trends affecting the competitiveness of businesses

all over the nation and globe will also affect how companies do business in the state.

• Any substantial changes in population or employment will affect Connecticut’s economy.

• North Haven has seen and will continue to see positive effects from business and institution expansions.

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Thank You! Alissa DeJonge

Vice President of Research

860-571-6206

adejonge@cerc.com

@CERCInc