A turn for the worse

Economic outcomes could have an impact on November election

“Connecticut has tremendous economic potential. It’s time to unlock that potential by attacking the issues that are holding us back and make this state a leader in economic growth and job creation.”

— Joe Brennan, president and chief executive officer, CBIA

With Connecticut voters headed to the polls in a matter of months, economic data is being watched with increasing scrutiny.

The July edition shows the New Haven Register’s Economic Scorecard at a potential tipping point. With five of the eight economic indicators headed in a negative direction, the implications for Connecticut’s November elections are front and center.

“We are at a very critical point in the economic cycle,” said Donald Klepper-Smith, chief economist and director of research for New Haven-based DataCore Partners and author of the Scorecard. “We’re starting to see some cracks in the foundation. But that’s not unusual given the length of the current business cycle.”

Connecticut’s economy is well into its ninth year of recovery following the 2008 recession, according to Pete Gioia, an economic adviser for the Connecticut Business & Industry Association. But despite the length of that recovery, the state has recovered only 86 percent of the jobs it lost in the recession, the slowest of any of the six New England states, Gioia said.

Joe Brennan, president and chief executive officer of CBIA, said the upcoming election cycle is critical.

“Connecticut has tremendous economic potential,” Brennan said in a statement. “It’s time to unlock that potential by attacking the issues that are holding us back and make this state a leader in economic growth and job creation.”

The state lost 1,200 jobs in July. By contrast, the New Haven area added 4,200 jobs in July, making it one of the regional economic indicators that is headed in a positive direction.

The unemployment rate for the New Haven area also was headed in a positive direction in July, falling 0.4 percent to 4.5 percent.

The only other Scorecard indicator headed in a positive direction was the single-family median home price. That number increased by $10,000 to $250,000.

Among the economic indicators headed in a negative direction in July were the New Haven area’s labor force and the number of new housing permits issued in 14 area towns, which was down by almost 31 percent compared to July 2017.

The key indicators that tipped the Scorecard in a negative direction were consumer spending power, consumer confidence and inflation , Klepper-Smith said.

Real disposable income, a measure of consumer spending power, was down 1.18 percent, he said.

The consumer price index, which to some extent reflects inflation growth, was up nearly 2.95 percent in July, according to KlepperSmith.

But perhaps the most worrisome indicator of all for the New Haven-area economy was July’s consumer confidence numbers. Consumer confidence for the region was down nearly 14 percent in July compared to the same period a year earlier.

“It says to me that consumers are starting to prepare for the next downturn,” Klepper-Smith said.