New Haven Register (Sunday) (New Haven, CT)
8 events that hit Connecticut pocketbooks, prosperity in 2022
Two years after the COVID shutdown, Connecticut and the nation spent 2022 digging out, a mixed year between the bookends of legalized sports betting at the end of 2021 and recreational cannabis sales at the start of 2023. The home state performed on par with the nation overall, reelected a governor committed to a centrist path for growth and suffered a couple of shocks late in the year.
Below are my picks in order of how they stacked up not in shaping the business scene, but rather in how they affected — and will affect — the welfare of Connecticut families.
1. Growth fuels massive state surplus, tax cuts
It’s hard for Connecticut’s naysayer coalition to accept, but the state held its own in income gains and overall growth in 2022, a tough year of inflation everyplace. The CT economy grew at a 1 percent annual rate through September, not a great pace, but good enough to rank No. 12 among states, well ahead of the flat national average. Make no mistake, the home state has plenty of big economic headaches. But aided by a flood of federal pandemic relief cash, the Connecticut state budget logged a surplus of $4.3 billion in 2021-22, plus another $1 billion of relief money we planned to use but didn’t need, plus another $2.8 billion in likely surplus in the last six months. With lawmakers debating how big the tax cuts should be in 2023 after a giveback of $600 million to taxpayers in 2022, taxes and the economy stand as the clear No. 1 story of the year. The “permanent fiscal crisis” that dogged Connecticut for more than a decade is finally over.
2. Inflation leads to struggles and gasoline tax break
When the first reports of rising inflation came in the spring of 2021, optimists like me blamed the blowup on the supply chain and figured we’d be back to normal by the winter of 2022. We were not. Inflation held at around 8 percent for most of the year — higher for food and energy — disrupting lives and upending Connecticut. The Russian invasion of Ukraine combined with post-COVID consumption to send gasoline and heating oil prices skyrocketing. Lawmakers and Gov. Ned Lamont suspended the state’s 25-cent-per-gallon gasoline tax from April through December, and will now phase it back in. A Hearst CTInsider-WFSB poll of voters in the fall showed most people saying the CT economy was worse in 2022, not better, as buying power eroded and rising interest rates flattened the housing market.
3. Airline routes take off at two airports
Connecticut’s up-anddown efforts to attract new airline destinations brought triumphs in 2022, and not just at the state’s flagship Bradley International Airport. Upstart, discount airlines led the charge at Bradley and at Tweed New Haven Airport. In February, Breeze Airways, which launched local service in 2021, said it would make BDL an east coast hub. By year’s end the Utah-based carrier had 14 destinations and said it would add four more routes this winter. Spirit Airlines held its maiden flight from Bradley to Montego Bay, Jamaica on Dec. 15, a milestone for the state’s Caribbean-American communities. And in June, Air Canada restarted Bradley flights to and from Toronto. Many of these moves came with state subsidies.
The long game, as always, is to keep the routes after the excitement calms down. Bradley is close but not yet back to prepandemic passenger numbers. Over at Tweed, startup Avelo Airlines built on its November, 2021 launch to end 2022 with 14 routes from New Haven. That brought Tweed to 600,000 passengers arriving and departing for the year as it looks to expand with a new terminal – without state aid.
4. Restaurants, subs drive jobs amid a recession watch
Connecticut employers added 36,000 new positions in the year ending in November, preliminary reports show. That’s a slower pace than the nation’s and we remain below pre-pandemic job levels but it’s far better than most years for the state. Unemployment fell to 4.2 percent from 5.2 percent, a faster decline than in the U.S. as a whole. The leisure and hospitality sector — think restaurant resurgence — led the job gains as the biggest problem in many industries was finding workers. Electric Boat continued its steady hiring as the U.S. Navy ramps up the sub fleet. No one knows how to view these job trends because we’ve never before come out of a pandemic shutdown. But the worry over finding workers could end abruptly in 2023 if we see a recession, as many predict. An early warning sign: Connecticut saw declines in the number of residents who said they were working in each of the last four months, reversing back-to-work momentum that had been strong in the early months of 2022.
5. Electric prices shock CT
The multi-headed inflation story pulled an unpleasant shocker on Nov. 17, when Eversource and United Illuminating told the state their prices for electric generation, passed along to most customers, would double starting Jan. 1, at least until July 1. The result: Residents who use the utilities as their electric suppliers will see price hikes of about 40 percent at Eversource and 35 percent at UI, a unit of Avangrid. That means most families will need to pay an extra $40 to $90 a month, depending on how much juice they use. I created a calculator so you can check your exact increase – but there’s no quick way to calculate the harm to the state’s prosperity in 2023. State officials took some steps and are taking more to circuit-break the bad news. On Tuesday, Jan. 3, regulators in three states haul Eversource into a hearing to do some ’splaining. Not that anyone can reverse the higher charges that take effect Sunday.
6. Opioid settlements end years of lawsuits
A landmark, multi-state settlement in March with Stamford-based Purdue Pharma and the Sackler family became the cornerstone of a series of shotgun agreements that culminated years of litigation with makers and distributors of opioid medications. Connecticut will receive $95 million of the $6 billion from Purdue and the Sacklers, a nationwide deal negotiated by Attorney General William Tong, who’s also from Stamford. In all, the state will take in more than $600 million in the payouts, including separate deals announced this month with Walgreen’s and CVS totaling $127 million. The deals bring new protections against opioid abuse and raise hopes that the 21st century scourge will abate, a year after the 2021 tally of deaths in Connecticut reached a horrendous 1,413. The opioid cases are part of Connecticut’s long, deep dive into multistate, multi-year investigations including alleged price-fixing by generic drug-makers and multiple accusations of violations by Facebook and other social media companies.
7. Bank merger rough on People’s people
Connecticut, a hub of bank headquarters in the late-20th century, saw its largest homegrown bank cease to exist in 2022 as Buffalo-based M&T Bank swallowed People’s United Bank in an $8.3 billion deal. It did not go smoothly. When the merger was final on April 2 — with an obscene payout of $34 million to departing CEO Jack Barnes — the biggest worry was layoffs and the fate of the People’s Bridgeport headquarters. M&T said it would cut 747 Connecticut jobs, keeping about 2,000, but vowed to maintain a regional hub at the old head office. The real crisis came in September, when M&T merged former People’s United accounts into its system. Many customers couldn’t withdraw money, pay bills or get adequate assistance. Elected officials called for investigations by federal regulators. M&T promised to make it right and by year’s end, the picture was stable.
8. Black Hawk contract down
Connecticut’s core identity as the aerospace and defense state didn’t crash on Dec. 5, when Sikorsky lost a competition to replace its storied Black Hawk helicopter. But over the decades, if the Army’s choice of Texas-based rival Bell to build the nextgeneration medium-lift attack rotorcraft holds up, the state’s prowess — and its manufacturing base — will surely take a hit. Sikorsky, a unit of Lockheed Martin, had teamed up with Boeing to pitch the Defiant-X, with more maneuverability but less speed than the tilt-rotor Bell V-280 Valor offering, which moves like an airplane in mid-flight. The first contract was for $1.3 billion but long-term sales of the Black Hawk replacement are estimated at $80 billion. No one can say how the loss would affect Sikorsky’s 8,500-person workforce in the main Stratford plant and in Bridgeport, Trumbull and Shelton, or its 280 in-state suppliers. There’s still years of work upgrading many of the 4,000 Black Hawk and variant aircraft that have been manufactured since the mid-’70s. And another competition against Bell will decide who gets to build the next scout helicopter. On Wednesday as the year approached its end, Lockheed and Boeing filed a protest — a move that has worked in the past including 15 years ago when Sikorsky snatched victory back from Boeing for a search-and-rescue craft.