New Haven-area economic indicators suggest cautious optimism

As discussion continues as to whether Connecticut is teetering on the brink of a recession, the economic indicators used in the New Haven Register’s monthly economic scorecard have a less troublesome outlook.

Seven of the eight economic indicators used in developing the scorecard were headed in a positive direction, said Donald Klepper-Smith, chief economist and director of research for New Haven-based DataCore Partners. The region’s unemployment rate of 4.3 percent in November remained unchanged from the same period in 2016, earning a neutral rating from Klepper-Smith.

“If you were to write a script of what you wanted the New Havenarea economy to look like, given

“If you were to write a script of what you wanted the New Haven-area economy to look like, given all that is going on around it, it would look like this . ... The question is whether or not it is sustainable.” — Donald Klepper-Smith, chief economist and director of research for New Haven-based DataCore Partners

all that is going on around it, it would look like this,” KlepperSmith said. “The New Haven area is one of the ‘haves’ in a state of ‘have-nots.’ The question is whether or not it is sustainable.”

He said two of the key indicators for the New Haven area were growth in both total employment and labor force. Total employment grew by 0.5 percent in November 2017 compared to the same period in 2016, while the labor force grew by 1.1 percent.

While that level of growth isn’t what could be called robust, it is better than the state of Connecticut as a whole, Klepper-Smith said.

“The state as a whole has lost jobs in four out the last five months,” he said.

The New Haven area, on the other hand, has recovered all the jobs it lost during the last recession, according to Klepper-Smith. He said the focus of the New Haven-area employment picture — health care and education, which some economists refer to as the “meds and eds economy” — is beneficial given the uncertain economic climate that Connecticut has as whole.

“We know that some employment sectors like retail are having a tough time,” Klepper-Smith said. “Health care and education jobs tend to be recession resistant.”

Two other key economic indicators — the median sale price for single-family homes and the number of new housing permits issued — show the New Havenarea housing market remains headed in a positive direction, he said.

The median sale price for single-family homes in 14 New Haven-area towns during November 2017 was $220,300, an increase of $2,825, or 1.3 percent, when compared to the same period in 2016. The number of new housing units approved in the New Haven area for November 2017 was up by 10 units, or 50 percent, when compared to the same period in 2016.

“When you see growth in the value of your home, the idea that the economy is doing better becomes more personal,” KlepperSmith said.

But continued difficult winter weather could put a crimp in the New Haven-area housing market, he said.

“Any time you talk about the health of the housing market market in January and February, you have to be careful because the weather is such a variable,” Klepper-Smith said. “When you start to move into March, April and May, the numbers start to even out.”

The key to whether the New Haven-area economy avoids falling into a recession “is whether it can sustain its current momen-

tum,” he said.

“Given the state’s current tax situation and out-migration (people moving to other states), it’s going to be difficult,” Klepper-Smith said, citing the results of two recent studies.

Connecticut was fourth among states that had more people moving out that relocating here in 2017, according to the moving company United Van Lines. And a study by Kiplinger’s, a publisher of business forecasts and personal financial advice, has Connecticut among the top 10 least tax-friendly states in the nation.

Hearst Connecticut Media file