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Connecticut Economic Overview “Recovery Underway?”

Todd P. Martin:. Connecticut Economic Overview “Recovery Underway?”. May 2002 Todd P. Martin 1st VP & Chief Economist People’s Bank 203.338.4826 tpmarti@peoples.com. US Economic Outlook - 2002:. The Recession is over - mild recovery underway

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Connecticut Economic Overview “Recovery Underway?”

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  1. Todd P. Martin: Connecticut Economic Overview“Recovery Underway?” May 2002 Todd P. Martin 1st VP & Chief Economist People’s Bank 203.338.4826 tpmarti@peoples.com

  2. US Economic Outlook - 2002: • The Recession is over - mild recovery underway • Fed aggressively cut fed funds to 1.75% last year - lowest since 1961 - Not expected to tighten until the summer of 2002, at the earliest. • Economy responding to lower interest rates, stimulative fiscal policy, lower energy costs, and a swing in inventories. • Unemployment rate still expected to rise through mid-2002 • Risks to the downside: Additional terrorist attack - Escalating unrest in the Middle East - rising oil prices - risk of synchronized global recession - ‘Enronitis’ - weak corporate profits - delayed capital spending

  3. Recession may have been the mildest on record? Real Chain Weighted Gross Domestic Product Growth - % change SAR 2nd Q 2002-4th Q 2002 are forecast Source: BEA, Conference Board People’s Bank

  4. CT Economic Outlook - 2002: • CT economy not immune to recession but out-performs in terms of income growth & the unemployment rate • Do not expect repeat of 1990s recession due to more diversified employment mix (defense a stabilizing factor) - balanced real estate markets - State fiscal position - banks have adequate capital & credit available • CT has lost 28,500 jobs since 7/00 (1.7%) - Unemployment rate currently 3.5% rises to 4.0%-4.5% later this year. • Risks: National recovery - continued Bear Market - high costs - deteriorating fiscal condition - exposure to energy shocks

  5. People's Bank Business Barometer stalls Source: People’s Bank, Centerprise Advisors

  6. PBBB YOY shows worst may be over for CT? Source: People’s Bank, Centerprise Advisors

  7. Quarterly change in PBBB turned negative in 2001 Source: People’s Bank, Centerprise Advisors

  8. CT has lost 28,500 jobs since mid-2000 (Thousands) Source: BLS, CT Labor Department

  9. Both US & CT employment down 1% YOY Source: BLS, CT Labor Department

  10. CT has lost over 40% of its man. jobs since 1984 (Thousands) Source: BLS, CT Labor Department

  11. CT Service employment is up nearly 80% since 1984 (Thousands) Source: BLS, CT Labor Department

  12. Biggest job losses in Hartford & Bridgeport LMA’s Change in non-farm employment Mar. 2002 vs. Mar. 2001 (NSA) Source: CT Labor Dept.

  13. Hardest hit employment sectors in CT Change in CT Non-Farm Employment Mar. 2002 vs. Mar. 2001 ( Not SA) Source: CT Labor Department

  14. CT gained jobs in these sectors YOY Change in CT Non-Farm Employment Mar. 2002 vs. Mar. 2001 ( Not SA) Source: CT Labor Department

  15. CT unemployment rate lower than US rate % of labor force (SA) Source: CT Labor Department

  16. CT Initial unemployment claims may have peaked? Source: CT Labor Department

  17. All LMAs have unemployment rates below 5.5% CT Unemployment Rates % by Labor Market Area (NSA. Mar. 2002) Source: CT Labor Dept.

  18. Housing permits up in most areas YTD % Change in CT New Housing Permits Authorized YTD Jan. - Mar. 2002 vs. 2001 by LMA Source: CT DECD

  19. Housing not overbuild like the mid-1980s Total housing permits authorized in CT in units 2002-2005 is forecast Source:CT DECD, New England Economic Project

  20. Auto registrations down 12.4% YTD Connecticut New Auto Registrations Processed YTD - (Jan. - Mar.) Source: CT Labor Department

  21. Tax revenues are down 5.9% this year (FY 01-02) Year-to-Date % change in CT Tax Revenues ( FY 01-02 vs. FY 00-01 July - Mar.) Source: State of CT Dept. of Revenue Services

  22. CT projects deficits after 10 years of surpluses General Fund surplus or deficit from operations - fiscal years - $millions 2002-03 are estimated Source: CBIA, CT OPM

  23. Summary • Recession over - mild recovery underway • CT economy - not a repeat of the early 1990’s • Out-perform US - unemployment & income • Under-perform US - population & job growth • Pros: Wealth - productivity - tourism - bio-tech • Cons: High costs - manufacturing - energy - Wall Street - State fiscal condition

  24. For more information... Please check out our web site at www.peoples.com for Economic Perspectives and other bank products & services

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