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Connecticut Outlook 2004:3 to 2008:4 Edward J. Deak, Ph.D. Roger M. Lynch Professor of Economics Fairfield University Connecticut Model Manager NEEP.

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Presentation on theme: "Connecticut Outlook 2004:3 to 2008:4 Edward J. Deak, Ph.D. Roger M. Lynch Professor of Economics Fairfield University Connecticut Model Manager NEEP."— Presentation transcript:

1 Connecticut Outlook 2004:3 to 2008:4 Edward J. Deak, Ph.D. Roger M. Lynch Professor of Economics Fairfield University Connecticut Model Manager NEEP

2 CT & US Outlook 11/04, Slide2 CT Forecast - Overview The job loss in CT (-3.6%) exceed that of the U.S. (-2.1%), and lasted longer (7/00-7/04) vs. (3/01-8/03). The CT job low was 1,638.1k in 7/ firms cut 3,442 positions 4/04-9/04 7 employers are on a watch list for further job cuts. The NEEP 11/04 forecast is weaker than that of 5/04 NEEP expects 0 net new jobs in ‘04, +21k=’05, 19k=’06 Job growth in Prof/Bus, Ed/Health, Leisure/Hospitality ’04 Real personal income (+1.1%) & RGSP (+5.6%) ‘04 home permits  20%+, existing sales  1k, prices  by $19.1k or 9.4%

3 CT & US Outlook 11/04, Slide3 Tracking CT Business Cycle CT Indicator (sa)Best Worst Diff Sept 2004 Nonag Employ 7/00 7/04 1,699k 1,638k -61k1,644k Unemploy Rate 7&8/00 3&7/03 2.1% 5.7% +360bp4.7% Wkly New Claims9/00 3/03 3,168 6,245 +3,0774,067 # Unemployed7/00 3/ k +66k 84.1k

4 CT & US Outlook 11/04, Slide4 CT Employment Cycle Peek/Trough:

5 CT & US Outlook 11/04, Slide5 CT Forecast 2004 vs CT vs. U.S. % Change Indicator %  CT %  US Jobs (mil) Mfg Jobs(th) Serv. Jobs (th)1,1361, RPer Inc (B$96) UE Rate (%) % Home Pmts 10,435 11, Lab Force (mil) RGSP (B$96)

6 CT & US Outlook 11/04, Slide6 New Unemployment Claims Weekly Average (sa)

7 CT & US Outlook 11/04, Slide7 Major Job Cuts 4/04-9/04 Total 3,442 jobs : Firms 33 Kimberly-Clark (-323) Paper products Wachovia (-271) Financial Services Clairol (-285) Hair products Huffman Koos (-175*) Retail Electric Boat (-134) Submarines Solo Cup (-131) Paper products USF Red Star (-169) Trucking Weathervane (-175) Retail Lacy Mfg (-100) Fabricated Metals

8 CT & US Outlook 11/04, Slide8 CT Job Cut Watch List IBM (500) - Southbury St.Paul/Traveler’s – Greater Hartford Oxford Health – Trumbull: Merger w/United Bank America/Fleet – Min cuts at branches Sikorsky Aircraft – Comanche + Marine One U.S. Naval Submarine Base – New London Air National Guard Unit – Bradley Airfield

9 CT & US Outlook 11/04, Slide9 Major Job Adds 10/03-4/04 Total 1,285 #Firms 6 Charter Oak Market (+200) Retail WalMart (+300) Retail UConn (+150) Education Ikea (+400) Retail Gerber Coburn (+130) Instruments Bank of America (+105) Financial Serv

10 CT & US Outlook 11/04, Slide10 CT Forecast 2004 to 2008 CT Indicator Jobs (mil) Mfg Jobs (th) Serv. Jobs(mil) Per Inc ($B96) Home Pmts 11,47510,0839,0579,0389,261 Lab Force (mil) ,854 RGSP (B$96) Pop (mil) Unempl Rt %

11 CT & US Outlook 11/04, Slide11 Source & Number Job Changes NAICS: vs

12 CT & US Outlook 11/04, Slide12 % Change in Real Output U.S., CT, NH Metro

13 CT & US Outlook 11/04, Slide13 % Change in Employment U.S., CT, NH Metro

14 CT & US Outlook 11/04, Slide14 % Change Personal Income U.S., CT, NH Metro

15 CT & US Outlook 11/04, Slide15 % Change in Home Permits U.S., CT, NH Metro

16 CT & US Outlook 11/04, Slide16 % Change Existing Home Prices U.S., CT, NH Metro

17 CT & US Outlook 11/04, Slide17 CT Forecast Risks National: Iraq – Cost + affect on consumer & business confidence Energy prices – Sap purchasing power + slow bus spending Federal Reserve (i) changes – Rise w/o inflation present Bush 2 nd Term Agenda – Tax cuts, social security, energy Twin Deficits – Federal Budget + Balance of Payments China – Trade value of Yuan: Drains U.S. spending Successor to FR Chair Alan Greenspan State: Higher energy prices – Gasoline, nat gas, heating oil Gov leadership – Gov Rell + mix of new legislature New electricity infrastructure - $ cost + burden sharing CT late to join economic expansion

18 CT & US Outlook 11/04, Slide18 Economic Agenda for 2 nd Term 2003 tax cuts – Made permanent fast Energy bill – Expanded supply focus - Access to federal lands in Alaska - Tax incentives for exploration - Tax incentives for conservation Social Security – Partial privatization - Voluntary – Young, gain control v. lose certainty - Finance gap – 1-2% rise in payroll taxes - “Ownership society”: Ex. Health Savings Account

19 CT & US Outlook 11/04, Slide19 Economic Agenda 2 nd Term Tax reform – Focus: Consumption v. Income Goal: Broaden base to lower rates Goal: Solve AMT problem Tax-overhaul commission – Fast report New tax revenue sources pay for reform - Repeal state + local income tax deduction - Lower cap on mortgage interest deduction - Cap + tax employer provided health care

20 CT & US Outlook 11/04, Slide20 Bush Personal Tax Proposals Fix highest tax rates at 33% and 35% Fix Cap Gains & Dividend Tax at 0 & 15% Repeal Estate Tax Create 10% Tax Bracket: $14k indexed Increase AMT Exemption: $40 and 58k Expand Child Credit: $1,000 Expand Std Deduct Married 2x Single Expand 15% Tax Bracket Married: 2x Single Expand & Index EITC for Married

21 CT & US Outlook 11/04, Slide21 Sectors That Should Benefit From Re-election of Pres. Bush Insurance – No uniform fed regulation Real Estate – No rules allowing bank entry Securities – Min scandal related regulation - Windfall if privatize social security Energy – O.K to drill in Alaska Drug – No price caps or reg of pill prices - More favorable rules for Medicare drug plan Technology – Protect intellectual property Defense – Increased military spending


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