sectereconomic outlook: global, u.s., connecticut, and new … · 2019-12-02 · sectereconomic...
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seCTer Economic Outlook: Global, U.S., Connecticut, and New London
County
A Bon Jovi PerspectivePresented by Alissa K. DeJonge
Vice President of ResearchConnecticut Economic Resource Center, Inc.
November 19, 2015
Presentation Overview1. Global Trends2. US Indicators3. Connecticut Trends4. New London County Effects
Global Themes• Cautious optimism in China• Economic concerns in Europe• Security concerns• Devalued commodities
“Livin’ on a Prayer”-1986
Cautious optimism in China• China stock market bubble• Long-term effects of lifted one-child policy• Considering currency devaluation to increase
exports
Source: Federal Reserve FRED; The Economist
Economic concerns in Europe
Source: Bank for International Settlements
RefugeeCrisis
Source: European Commission, Reuters
• Over 12.2 million Syrians in need of humanitarian assistance
• Implications for MENA◦ Conflict spillover◦ Oil transport
logistics• Implications for
Europe◦ Growth?◦ Security concerns
• Implications for USA◦ Tightening of
exports? Spending?◦ Military actions?
Devalued commodities• Low oil prices and oil producers in debt
◦ Crude oil selling at $40.67 per barrel on NY Mercantile Exchange
• Gold is at a five-year low◦ Under $1,070 per ounce◦ Metals normally thrive in shaky economic times
however potential interest rate rise and uncertainty in industrial markets are causing plummet
Source: MarketWatch
U.S. Themes• Relatively strong growth• Federal Reserve potential actions• Growth forecast
“Rockin’ in the Free World”-1989
2015 Q3 GDP Growth 1.5%Positive contributors
• Private Consumption• Government Spending• Non-residential fixed
investment• Exports (slowed)
Negative contributors• Imports (increased) • Private inventory
investment decreased
• 2015 Q3 PMI 54.8
Federal Reserve interest rate decision looms
• Unemployment rate (U3) is 5.5%; (U6) is 9.5%
• Job growth is promising • Labor force participation rate
is decreasing• Wage growth
Source: Bureau of Labor Statistics, Federal Reserve FRED
Growth Forecast• Budget deficit expected to
hold until 2018• CBO predicts GDP growth by
Q4 of 2015 and 2016~3%• Increases in consumer
spending, business investment, and residential investment will drive growth
Source: Bureau of Labor Statistics
Connecticut Headlines• OFA issued projections that Connecticut
is facing a nearly $2.3 billion gap in state finances over the next two fiscal years. –CT Mirror, Nov 13, 2015
• “Connecticut GDP growth Among Slowest in the Nation” -Hartford Courant, June 2015
• Ranked #1 in per capita personal income – U.S. BEA
“Keep the Faith”-1992
Components of GDP
Source: Bureau of Economic Analysis
Healthcare, Retail and Manufacturing Dominate Employment
Source: Connecticut Department of Labor (QCEW)
Wage growth is occurring in some industries
Source: Connecticut Department of Labor (QCEW)
Exports dipped in 2014 for largest destination
Rank Country
1 France
2 Canada
3 Germany
4 Mexico
5 United Arab Emirates
6 China
7 United Kingdom
8 South Korea
9 Japan
10 Netherlands
Source: U.S. Census Bureau
Housing market improving
350
370
390
410
430
450
470
490
2005
-01-
0120
05-0
7-01
2006
-01-
0120
06-0
7-01
2007
-01-
0120
07-0
7-01
2008
-01-
0120
08-0
7-01
2009
-01-
0120
09-0
7-01
2010
-01-
0120
10-0
7-01
2011
-01-
0120
11-0
7-01
2012
-01-
0120
12-0
7-01
2013
-01-
0120
13-0
7-01
2014
-01-
0120
14-0
7-01
2015
-01-
01
All-Transactions House Price Index for Connecticut, Index 1980:Q1=100, Quarterly, Not Seasonally Adjusted
• Single family home sales up 9% YOY
• Housing prices are on an upswing
Source: Federal Reserve FRED; The Warren Group, Berkshire Hathaway
Household formation growing among mature population
Source: U.S. Census Bureau
• Increase in single family households due to 55 and older forming new households
• Trend is expected to continue to 2017
New London County HeadlinesMajor Employers• Foxwoods Resort Casino• Mohegan Sun• Millstone Power Station• Electric Boat• Pfizer Inc.• Naval Submarine Base
"Who Says You Can't Go Home“ - 2006
Growth in Families
Source: U.S. Census Bureau
Foreign Born Population Effects
Source: U.S. Census Bureau
New London County stands out in a few occupation wages
Source: Connecticut Department of Labor
Continuing the trend of working outside the County
85.0
90.0
95.0
100.0
105.0
110.0
115.0
2007 2008 2009 2010 2011 2012 2013
Commuting Patterns (Indexed to 2005 )
Living and Employed in the Selection Area Living in the Selection Area but Employed Outside Total employment
Source: U.S. Census Bureau
Casinos, Healthcare and Manufacturing Dominate County Employment
Source: Connecticut Department of Labor
Changes in Average Annual Employment
Industry 2012 2013 2014 3-YearChange
% Change
Finance and insurance 1,904 1,925 2,738 834 44%Accommodation and food services 11,816 12,125 12,262 446 4%
Manufacturing 13,850 14,244 14,208 358 3%
Construction 3,323 3,454 3,633 310 9%
Retail trade 13,995 14,248 14,246 251 2%
Information 1,216 1,166 1,091 -125 -10%
Wholesale trade 2,981 2,865 2,850 -131 -4%Professional and technical services 5,342 5,109 5,090 -252 -5%Transportation and warehousing 3,395 3,048 3,079 -316 -9%Total Local Government 27,727 26,279 25,139 -2588 -9%
Source: Connecticut Department of Labor (QCEW)
Differences in data collection methods among CES and LAUS
Source: CERC
CES LAUS
Survey of businesses’ payroll employment
Based on current population survey (CPS)
Benchmarked annually to QCEW
Statistical smoothing
Workers with more than one job can "show up" in CES more than once
13-week moving average with more weight on more recent data
105,000
110,000
115,000
120,000
125,000
130,000
2014 2014 2014 2015 2015 2015
Norwich New London LMALAUS and CES Employment 2014-Sept. 2015
LAUS Norwich New London CT Section Not SeasonallyAdjusted
CES Norwich New London CT Section Seasonally Adjusted
Housing market starting to rebound
• New London housing bubble larger than state, larger downturn during recession
• Recovery stabilizes by 2011
• 87.8% increase in housing permits from 2010
• New London houses are spending 8.5% fewer days on the market in Q3 of 2015 than in previous quarters
0
20
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1990
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2014
Perm
its
Annual Housing Permits (1991-2014) Indexed 1990
Connecticut New London
Source: CT Department of Economic and Community Development
In Conclusion…Global• Cautious optimism in China• Economic concerns in Europe• Security concernsU.S.• Relatively strong growth• Federal Reserve potential actions• Growth forecastConnecticut• Slow GDP growth with strengthening housing marketNew London County
• Changing industrial landscape and commuting patterns and promising business news
