February 22, 2016

Sunlight Breaking Through Economic Clouds

The Connecticut Economic Digest’s recent review of national and state economic statistics finds reasons for cautious optimism about the national and state economy. The Digest, which is published jointly by the departments of labor and economic and community development, reported that the nation’s Real Gross Domestic Product is expected to increase by almost 3% this year, possibly reflecting the impact of the 11.4 million jobs created since the last recession ended.

The Manufacturing ISM Report on Business and the Purchasing Managers Index also see continuing improvement. The former “reported the 77th consecutive monthly expansion of the overall economy into November 2015,” and the latter’s index “indicated growth in manufacturing for the 34th consecutive month.”

Connecticut’s economy also registered some good, if modest, numbers. Connecticut’s gross state product increased 0.6% in 2014, the latest year available, and the labor department sees personal income increasing 2.5% by March 2016. The economy regained almost 85% of the 119,000 jobs it lost during the 2008-2010 downturn.

But, as the Digest points out, “the state’s fiscal outlook was tempered in 2015 as evidenced by a FY 2014-15 deficit of $113.2 million, based on Generally Accepted Accounting Principles.” Other factors at play include “future Fed interest rate hikes, immigration reform, Eurozone debt, and China’s growth prospects, as well as geopolitical risks to the global economy in the Middle East, Europe, and Japan.”