CT Economist: No Recession Lurking
March 22, 2018
By Gregory Seay
The prospect for Connecticut's and the U.S. economies lapsing into recession anytime soon are remote, but new trade tariffs, a jittery stock market, plus this state's stubborn job recovery and population loss, could impact both down the road, an economist says.
"The good news: A U.S. recession is still unlikely over the near term,'' said New Haven economist Don Klepper-Smith, who is an adviser to Farmington Bank, noting the current recovery is into its ninth year.
Addressing a remote webinar audience Wednesday during Farmington Bank's quarterly economic outlook, the chief economist at DataCore Partners LLC said he expects a modest U.S. recovery to continue at least through the first half of this year.
"The bottom line is the odds of a recession over the next 18 months is one in three,'' Klepper-Smith said.
Regaining jobs back to top
He pointed to Connecticut's sluggish efforts to regain the 119,000 jobs it lost in the Great Recession, 2008-2009. So far, based on state labor department unemployment and job-growth data as of January, Connecticut has regained just 77 percent of those lost jobs, the economist said. By comparison, most other New England states have recovered at least all of their lost jobs, with several regaining double and triple their jobs deficits.
Connecticut's slow job growth, combined with a rollicking stock market that at times has many feeling less wealthy, and slow overall gains in take-home pay, Klepper-Smith said, are ganging up to make consumers less confident about their own finances, let alone the economy.
The result, he said, is that Farmington Bank's "business barometer,'' which tracks employment, consumer spending and related indices, has turned negative.
"Consumers really have a difficult time feeling this is a recovery,'' Klepper-Smith said.
For the rest of this year, he said he expects inflation to stay close to the 2017 rate of 2.1 percent. The 30-year mortgage rate, despite expectations for the Federal Reserve to hike the discount rate at least three times this year, starting as early as Wednesday, will end this year at around 4.25 percent to 4.5 percent.