The Connecticut Economy Will Recovery Last?

1. The Connecticut EconomyWill Recovery Last? September 9, 2004 Rocky Hill, Connecticut Bruce Blakey Northeast Utilities

2. 1. The “goodness” of economic news depends on who you are.(Where you stand depends on where you sit.) • Tight labor markets are bad for business, but good for job seekers. • Higher interest rates are good for savers, bad for borrowers. • “Higher oil prices are good for New Mexico, said Tom Clifford, chief economist with the state’s Taxation and Revenue Department. … If oil prices remain higher than last year, Clifford said it could be a windfall for the state.” (Roswell Daily Record 8-23-04)

3. 2. Employment, per capita income, housing prices, etc. vary greatly within Connecticut.

4. 3. Employment growth in Danbury and Hartford demonstrate the extremes.(Source: CT DOL)

5. 4. Electric usage clearly indicates that economic growth has returned, but may have leveled-off. (Source: NE ISO)

6. 5. Total jobs return to the 2000 peak in 2006. (Source: NU)

7. 6. The annual increase of Connecticut housing prices is strong, but not unprecedented.(Source: OFHEO)

8. 7. Residential permits remain stable and well below boom levels. (Source: NU)

9. 8. Personal income has been growing since 2002. (Source: NU)

10. 9. Real manufacturing GSP swooned in 2001, but is growing now.(Source: NU)

11. 10. The Connecticut OutlookJobs lag income growth.(Source: NU)

12. 11. Even the low U.S. outlook indicates moderate growth.

13. 12. Higher energy prices are an economic drag, but overwhelmed by wealth gains. (Source: BGB)

14. 13. Connecticut gets fewer jobs, but they are high paying.

15. 14. Our cost of living is above the national average, but low compared with New York and Boston.(Source: www.datamasters.com)

16. 15. Affordable housing is a major impediment to growth. (Source: BGB)

17. 16. Materials, services and labor which are expensive in Connecticut (+5 to +25%) dominate costs, but all costs matter.

18. 17. Connecticut is competing through higher productivity demonstrated in part by KWh per worker.(Source: BGB)

19. 18. Connecticut service jobs increase, manufacturing jobs continue to decline.(Source: NU)

20. 19. Medical Devices, an upcoming industry, are therapeutic and/or diagnostic devices i.e. not drugs. • Surgical Artificial hips/knees • Catheters Neural stimulators • Coronary stents Medical lasers • Pacemakers Biosensors • Prosthetic limbs Imagining Systems • X-ray machines Artificial organs • CT Scanners Biomaterial • MRIs • Up & Coming: Drug-eluding stents, Implantable debrifillators, Neurostimulation devices, Nanoscale biosensors Cardiac rhythm management devices, Home & self-care technologies, Tissue-engineered components & Less-invasive hip replacements • (Source: Biomedical Engineering Alliance & Consortium, The Medical Device Industry in Southern New England’s I-91 Corridor)

21. 20. The Northeast has 28% of the nation’s medical device manufacturing workforce.(Source: BEACON)

22. 21. The I-91 Corridor is the 17th largest metro area medical device employer. (Source: BEACON)

23. Medical Device Manufacturing Employment in U.S. Metro Areas (Top-20) LQ: 22. The I-91 Corridor medical device L.Q. is 1.89. (Source: BEACON)

24. 23. There are numerous medical device employers across New England.(Source: BEACON)

25. 24. Summary Comments • The national economy is growing, but employment growth is lackluster. • We lag the nation with weak job growth, but high wages. • The greatest risks relate to international crises and energy shocks. • Connecticut can’t compete on costs, but there are highly productive industries that should be nurtured. • The future hasn’t happened yet, so this forecast could be very wrong.