The "R" word and Connecticut

The state economy’s slowing momentum has lowered expectations for 2008, editors of The Connecticut Economy report in the spring issue, but “an outright economic slump isn’t necessarily baked in the cake.”

Connecticut home prices are at a 32-year peak, and earlier momentum lifted fourth quarter 2007 employment figures 1.1 percent above the same period a year ago.

Manufacturing activity slowed in the fourth quarter, however, and leading indicators for Connecticut’s future economic activity are mixed.

The latest economic forecast, provided by Daniel W. Kennedy, senior economist with the Connecticut Department of Labor, finds a two-thirds chance of recession, and a one-third chance of anemic growth but no recession.

The good news, says editor Steve Lanza, is that “these days, recessions don’t last as long, and by the time we realize that we’re in one, we’re on our way out.”

The U.S. economy has rebounded more easily from recessions since World War II because of automatic stabilizers, such as progressive income taxes, unemployment insurance, welfare benefits, and the earned income tax credit, and from the Federal Reserve’s quick action to ensure liquidity, writes William A. McEachern, professor emeritus of economics and founding editor of the magazine.

The spring issue also assesses the property tax cap issue and the economics of health care. It offers the latest data and forecasts for regions of Connecticut and the state’s labor market outlook.

For a pdf of the spring 2008 issue of The Connecticut Economy and to order a copy, go to www.cteconomy.uconn.edu    

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