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Connecticut

Connecticut. Edward J. Deak, Ph.D. Professor of Economics Fairfield University. CT Current Economic Conditions : The Bane of Harry Truman On the One Hand. CT Econ Recovery: Best pace to date Job creation = +17,600 in 2006; +3,200 jobs in 4/07

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Connecticut

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  1. Connecticut Edward J. Deak, Ph.D. Professor of Economics Fairfield University

  2. CT Current Economic Conditions:The Bane of Harry TrumanOn the One Hand • CT Econ Recovery: Best pace to date • Job creation = +17,600 in 2006; +3,200 jobs in 4/07 • Job comparison year ago = +20,300 vs. April 2006 • Unemploy rate = 4.2% vs. 4.0% in 4/06 vs. 4.5% U.S. • ME.com: CT to recover all lost jobs by 2007:Q4 • Real GSP = +3.6% in 2006 vs. 3.3% for U.S. • No sign of CT or U.S. recession through 2011 • Vast array of proposed commercial real estate projects • Bull market on Wall Street – Multiple sources of lift for CT • High concentration of wealth + wealth holders • High # Wall Street traders + Local financial managers • High # hedge funds, private equity, venture cap firms

  3. CT Economic Warning Signs:The Bane of Harry TrumanOn the Other Hand • Triple Economic Whammy • Slumping CT housing market – U.S. housing recession •  CT energy costs – Elec, gasoline, HHO = $9,800 per yr. • Rising U.S food prices – Corn diversion to ethanol • CT housing data • Home permits = -22.2% (DECD) =2006, -34.2% thru 3/07 • CT home sales (NAR) =  -11.9% 2006, -5.1% 07:Q1 (saar) • Median sale price 1-Fam home (Warren Group) • 2006 = +0.7% 07:Q1 vs 06:Q1 = -0.7% • Inventory – Higher Time on market – Longer • Buyers – Fewer Delinquencies – Rising • Fear: Housing slump spreads to CT economy

  4. Why CT Housing Slump is Likely to Slow the Gains in CT Economy • Supply Conditions – Depress price + sales • OFHEO: Prices are high, decreasing affordability • Past home price peak  Less cash out w/HELOC’s or refi’s • Home permits + sales    # jobs: const, RE, Retail, Fin • Higher #’s for non-prime loans in CT • Rising share of CT sub-prime + sub-prime delinquencies • Rate reset = Foreclosures + distressed sales  inventory • Demand Conditions – Depress price + sales • Tighter lending standards • Buyer reluctance: Fear “catching a falling knife” • Minimal demand from investor/speculators

  5. NEEP vs. ME.com CT Housing Forecasts Item 2006 % 2007 % 2008 % Permits 9,640 -18.9 8,836 -8.3 9,284 +5.1 ME.com 9,640 -18.9 9,760 +1.2 11,495 +17.8 Sales Exist53.0k -8.8 48.7k -8.2 49.2k +1.0 ME.com 53.0k -8.8 52.7k -0.6 52.2k -0.9 Med Price$ 311.8k +1.8 290.3k -6.9 286.0k -1.5 ME.com 311.8k +1.8 290.9k -6.7 296.2k +1.8 Result– NEEP decline steeper + longer duration than ME.com

  6. CT+ U.S. Housing Slump:Reduces NEEP Job Growth %  % Change

  7. CT Posted Job Adds & CutsNEEP Semiannual Totals # Jobs

  8. CT Job Changes by Employment Sector • Posted Job Changes:10:06 - 4:07 - Cuts: 37 firms – 4,298 jobs Adds: 25 firms +4,658 jobs • NEEP Job Change Projections by Sector (000’s jobs) 2006 2007 2008 2009 2010 2011 • Mfg -1.6 -1.6 -1.0 -0.4 -0.5 -0.7 • Const 1.0 -1.4 -2.1 -0.2 -0.4 -2.1 • Trade 0.3 0.0 -0.3 0.2 1.4 1.1 • Leis/Hosp 2.7 2.7 1.4 2.2 2.4 2.2 • Ed/Hlth 6.6 7.8 6.7 6.6 6.9 6.6 • Fin Serv 1.9 2.9 0.8 1.0 1.3 1.3 • Bus serv 4.5 2.2 3.9 4.3 4.5 4.0 • Govt 1.9 1.1 1.8 1.6 1.2 0.9

  9. CT + U.S. Housing Slump:Raise NEEP CT UE Rate UE Rate %

  10. New Home Permits 2005-11 % Change % Change

  11. Sales Existing Homes 2005-11 % Change % Change

  12. Median 1-Fam Home Price2005-11 % Change % Change

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