(October 28, 1999)  Highlights of the Connecticut Forecast - 1999:Q3 to 2003:Q4

While NEEP anticipates another year of good job gains for CT (+22k) for CT, the current low unemployment rate (2.1%) along with the decline in the size of the labor force should place strong limits on the pace of employment gains in 2000 (+12k) absent a recession.

Real GSP for 1999 should rise a hefty $5b or 4.1% while real income is expected to be up by $5.1b.   For 2000, the gains should be smaller at $2.1b and $2.9b respectively.

These advances follow on the heels of the 32.4k rise in jobs and a $3.8 bil. gain in real income for 1998.  Both were the best yearly figures in the last five for the CT recovery.

CT growth in 1999 will be helped by restrained U.S. inflation (2.0% CPI), low interest rates (5.79% 30yr T-bond), and a 3.9% expected rise in real GDP.

But CT labor markets are tight.  Only 35,900 are currently unemployed, and the CT labor force has declined by 26k from April-August after having fallen by 14k for all of 1998.

Y2K related disruptions, an overdue stock market correction, tighter Fed monetary policy, and the potential for global economic instability may slow U.S. and CT growth in 2000.

A gain of 1,500 jobs each at Pfizer and Mohegan Sun Casino will boost employment.

But the loss of up to 1,500 jobs at P&W, the cut of 1.5k jobs at EB, the drop of 1,100 jobs at Sikorsky, and 600 job cuts at Hamilton-Sundstrand will restrain the CT expansion.

Manufacturing jobs rose by 1.3k and 2.3k in ’97 and ’98 reversing a 12 year decline. But the above job losses will cut the numbers by -3,900 in ‘99 and -4,800 in ’00 to 269k.

Job gains will be in non-manufacturing with changes for 1999 and to 2003 in Construction (2.4k, 1.0k), Services (12.4k, 42k), Fire (3.3k, 6.8k), and Trade (4.2k, 20.5k).

CT’s population should grow slowly but steadily in 1999 (+6k) and 2000 (+7K) helped by a drop in outmigration to –6.2k in 1999 and –5.0k in 2000.

New home permits hit 11.9k in 1998, but may dip to 10.9k in 1999 as interest rates rise.

Permits should average 9.8k yearly to ‘03, with mortgage rates peaking near 7.6% in ’01.

  Sales of existing homes hit 49.8k in 1998 at an average price of $137.8k. Sales should rise a bit to 51.3k in 1999, and prices should rise by 5.2% to reach $145k.

Absent a recession and despite global uncertainties, the CT economy should drift higher constrained by the available labor supply, and movements by the Fed or on Wall Street.