Looking back and looking ahead
The top 10 economy stories of 2018 offer a preview of 2019 for Connecticut
It has not shaped up as a blockbuster year for economy and business stories. That’s bad and good.
We’d like to report that Amazon picked Stamford or Bridgeport-New Haven or that the housing market took off at last, ahead of the next recession. On the other hand, Connecticut’s meltdown seems to have abated in 2018 and the corporate climate is stable, contrary to reports of its demise.
And so a review of the year becomes a preview of 2019, with many evergreen issues such as job-creation, elections and, yeah, the casino debate. One day it will resolve itself, or maybe not.
Here’s the Top 10, a statewide look not at restaurants and the comings and goings of retail, but at the forces that shape prosperity in the nation’s richest, and arguably most imperiled, state economy. Statewide, but with an emphasis on the cities and towns we cover at Hearst Connecticut Media.
We did see some significant corporate action that didn’t make the Top 10 list, including a huge price offered for Blue Buffalo, by General Mills; Praxair’s long planned merger with rival Linde; and Boehringer Ingelheim vowing to boost its research spending to a total of $24 billion by 2025.
The list reflects prior reporting by my colleagues, especially Alex Soule, Jordan Grice and Paul Schott. Here’s hoping that all Connecticut stories lead to more prosperity in 2019.
10. Defense spending run-up
The old adage remains
true: As Sikorsky, Pratt & Whitney and Electric Boat go, so goes Connecticut. Defense spending under President Donald Trump remains robust and growing, with the three main Nutmeg State contractors making equipment that’s in favor. At Sikorsky, where employment hovers (sorry) around 9,000, the CH-53K King Stallion heavy lift helicopter program is stepping up for the aging Black Hawk production run. In May, the Stratford-based division of Lockheed Martin delivered its first 53K to the Marines, launching a planned run of at least 200.
9. United Technologies to split up
The breakup of Connecticut’s largest for-profit employer into three companies might be cause for alarm, as it leaves United Technologies Corp. with small pieces of two companies that will now be separate, after the split is done, perhaps in 2020. That includes the headquarters and some engineering at Otis elevator, which would be a separate company, and some administration at Carrier. They could be lost after the split. But, see above about Pratt & Whitney — the jet engine-making core of the company’s home state operations remains very healthy in the wheelhouse of the geared turbofan and Joint Strike Fighter programs. With three other UTC aerospace equipment plants in addition to Pratt, the state should survive the breakup fine.
8. GE makes shareholders throw up
The annus horribilus for General Electric in 2018, with the second CEO ouster in as many years, jolted share prices down to $6.71 on Dec. 12, just a nickel north of the devilish low of $6.66 in March, 2009. Back then, everyone was in the dumps. This time it’s GE melting down largely on its own. We’re tempted to gloat that GE’s 2-year stock tumble of 75 percent, and its humiliating dividend haircut down to a penny, follows its headquarters exit from Connecticut to Boston. But no. The old home state is home to many shareholders and more than 2,000 remaining employees.
7. Casino combatants ante up
We’ve watched this movie endlessly for four years now, but the battle for the right to build a commercial casino in Connecticut reached peak urgency in 2018. MGM Springfield opened, the U.S. Supreme Court permitted states to launch sports betting and the tribes’ attempts to win federal approval for a new deal with the state hit a wall. There’s now enough competition in nearby states that something has to happen in 2019. MGM, vying for open bids that would enable it to compete for a Bridgeport license, ended the year with its Connecticut leader also in charge of the Empire City Casino and Yonkers Raceway. Foxwoods and Mohegan Sun aren’t standing still either as they upgrade their resorts and amass backers against MGM for the upcoming General Assembly showdown.
6. CTRail commuters line up
The age-old crisis of trying to navigate the Connecticut Valley on public transit eased significantly in 2018 as the state opened its CTRail commuter line along with Amtrak, connecting New Haven, Hartford, Springfield and points in between. Hailed as a route to the connected future, it didn’t come cheap. Rail bed and station upgrades cost $569 million, all but $204 million from state borrowing, and the annual operating cost is $44 million. The crowds have lined up for peak trains, especially between the Connecticut cities, leading to friction with Amtrak. But the state subsidy per passenger remains sky-high.
5. Bridgeport projects rise up
There are two ways to look at development progress in Connecticut’s biggest city. One is that 2018 was a turning of the corner after decades without visible progress. The other is that it’s been decades without visible progress. Either way, 2018 saw actual new construction at Steel Point, the Dockmaster’s building, echoing a lighthouse; completion of the first phase at the Cherry Street Lofts apartments in the West End; a German-themed beer hall and a comedy club in a redeveloped block at McLevy Square; a groundbreaking at the conversion of the old Bluefish ballpark to an amphitheater; a new boat repair company at the old Derecktor shipyard on the harbor; apartment construction work underway at the formerly blighted Jayson-Newfield development; and more. Plenty of hiccups, like this past weeks missed deadline for financing by the firm redeveloping the Majestic and Poli theaters downtown. But all in all, it looks like progress heading into Mayor Joe Ganim’s re-election year.
4. Indeed.com hiring up
Stamford continues as Connecticut’s prodigious child, with a younger, techier and growing population of companies. No home runs just yet but this last month of 2018 brought another round of promised expansion at Indeed, the online job site with about 900 local employees. The payroll could rise to 1,700 at the Austin-based company’s east coast hub, but not without very hefty state incentives. That includes a $15 million package for the latest 500-job deal, similar to a 2017 agreement. Indeed stands in at the No. 4 spot for a cadre of tech firms including medical tester Sema4, in Stamford, and ASML, maker of chip-making equipment in Wilton. All cut deals to add hundreds of employees, and while it’s not thousands, these firms represent a road map for Connecticut’s revival.
3. Purdue Pharma critics fed up
Lawsuits against the Stamford maker of OxyContin and other opiate painkillers mounted in 2018, culminating in an action by the state of Connecticut, which tried but failed to reach a settlement deal with the Sackler family-owned drugmaker. The lawsuits accuse Purdue of deceptively marketing its opiates as nonaddictive and safe. More than 1,000 lawsuits, have been consolidated in federal court in Cleveland. In all, 35 states and numerous municipalities have filed suits, all dealing with a rising flood of overdose deaths. Purdue executives have said little publicly but the company maintains the lawsuits are baseless.
2. Jobs, state revenues and economic output are finally up
We’re accustomed to lousy economic years in Connecticut, so when we don’t get one, we’re a bit confused. Bashing aside, the state’s employers stood with 23,000 more jobs in November than a year earlier, a 1.4 percent gain — close to the 1.7 percent national jump. If it holds up through revisions, it would mark by far the best year for jobs in more than 20 years. State tax coffers finally reversed earlier declines, by more than $1 billion. And after a horrendous 2017 of last-place eco- nomic performance, overall growth in the first half of the year — the latest figure available — tracked the nation’s growth. Yes, yes, I know, thousands of people are still leaving, the state’s projected budget shortfall for fiscal 2020 is $1.7 billion, the job gains tend to be in lowerwage sectors and pension debt remains crushing. All true, but all would be worse without the signs of life we saw in 2018.
1. Lamont and the Democrats power up
Voters faced a stark choice for governor in November, with the economy as the sole issue. Democrat Ned Lamont promised to maintain investments especially in cities and towns in the hope of jump-starting the economy. Republican Bob Stefanowski vowed to end the state income tax and lower taxes across the board. Each said the other would bring ruin in the form of higher taxes (Lamont) or a choked-off state (Stefanowski). Huge turnout was due more to voters’ hatred of outgoing Democratic Gov. Dannel P. Malloy and GOP President Donald Trump. Lamont’s won despite Stefanowski’s bigger tally than former Gov. John G. Rowland ever polled, and Democrats swept back into strong majorities in the legislature. The state remains divided and Lamont inherits a fragile economy with less than a solid mandate and more than enough power to act.