Happy Days ... Are Long Gone

The photo shows Malloy with Edelson in 2011.  They both look so happy.  Malloy expected that his enlightened policies and massive tax increases would soon reinvigorate the state’s economy, and Edelson was going along for the ride in a repaired town dump truck, with well paved roads, rehabbed bridges, and sunny skies ahead!  Yeah, baby!

Well, here we are near the end of 2013, and where are we now?  Are we better off than we were two years ago?  The simple answer is no, we are not.  In fact, by most measures we are worse off.  For example:

·         The state economy is now in last place among all fifty states. 

·         We’ve experienced negative GDP growth in both 2011 and 2012.  No other state can make that claim.

·         Our real estate values are is stuck in the mud and not recovering as well as in other states.

·         The job situation hasn’t improved much either, as we lag many other parts of the country.

As we go to the polls tomorrow, let’s consider the awful state of our once vibrant state economy.  I’ve heard that you don’t change horses in the middle of a quagmire, but that’s what we must do now, if we ever want to get out.  Otherwise, we may just sink into it forever.

I pulled the quotes shown below from recent articles, from reputable newspapers to illustrate.  I apologize that I don’t have time to give proper credit to each quote.

·         Connecticut was the only state to post negative economic growth in 2012, the latest indication of its sluggish recovery from the recession and the financial crisis.  Connecticut's gross domestic product shrank by 0.1%, the worst performance in the U.S., according to a U.S. Bureau of Economic Analysis report released Thursday.   New Jersey and New York both grew 1.3% and ranked 36th and 37th in the U.S. respectively.  The rest of the country grew more rapidly. The nation's GDP expanded by 2.5%.

·         On Thursday, the 2011 GDP number was revised to -0.1% … Connecticut has experienced negative growth for two straight years.

·         "The Connecticut economy is coming back inch by inch instead of yard by yard," said Don Klepper-Smith, chief economist at DataCore Partners, an economic and demographic research firm in New Haven, Conn. "The recovery has been spotty at best."

·         Connecticut has regained only 47% of the jobs it lost during the recession

·         Connecticut's poor GDP growth took some economists by surprise. "I wasn't expecting it to be so bad," said Steven Lanza, an economist with the University of Connecticut.

·         Economists said the U.S. has begun to experience a housing rebound that Connecticut has yet to join. Median sales prices in Connecticut are still down 30% from the peak levels of the housing boom, Mr. Lanza said.

·         "You don't have a sustainable recovery until you have a housing recovery. And we don't have a housing recovery here yet," said Peter Gioia, an economist with the Connecticut Business and Industry Association in Hartford, Conn.

·         Connecticut took a “nose dive” to last place in a report assessing the credit quality of all 50 states released Tuesday by Conning, Inc., a Hartford-based asset manager that does financial research for insurers and institutional investors.

·         The report took a scathing view on the state’s rising unemployment, declining home prices, high debt per capita and other factors, though state officials resisted the notion that Connecticut’s credit is the worst in the country.

·         “Connecticut is not on most lists of states in fiscal stress,” said Paul Mansour, managing director of Conning’s municipal credit research group and lead author of the report. “However, the reality is quite alarming. The state is among the worst in job creation, tax revenue growth, and has not yet seen a recovery in home prices. It has very high debt and retirement obligations, little budget flexibility and no rainy day fund balance.”

·         Since 2007, Conning has published a State of the States Municipal Credit Research Report twice a year. It ranks all 50 states on credit quality based on factors such as revenue growth, year-over-year employment gains and foreclosure rates.  North Dakota was at the top of the list, along with other western states, while Connecticut fell from 37th in the last report issued in June to 50th place in the most recent ranking. New Jersey was 49th and New York was 48th.

·         Conning said that several credit indicators have “fallen significantly” since its last report earlier this year.

·         Year-over-year home prices in the state dropped 4.7 percent, according to the Federal Housing Finance Agency, which is the worst performance of any state.

·         Connecticut also has the highest debt-per-capita burden for all states and is ranked 48th in terms of economic debt per personal income, according to the report.

·         Connecticut hasn’t recovered from the Great Recession and it is “very vulnerable” to federal budget cuts. The ongoing job losses and declining home values portend of future credit stress and the state’s credit ratings risk downgrades, Mansour and Rappaport wrote.

I’ll add my own comment here, to say that Obamacare is coming and it’s going to have a negative impact on the US economy, and on the state’s economy.  If we’re at negative to zero growth now, Obamacare will push us back to even lower numbers.  Folks, I’m not getting on the soapbox against Obamacare, I’m just stating the fact that it will certainly have a negative impact on job growth and on GDP.  It’s like we’re living in a beach house that hasn’t been fixed up since the last hurricane a few years ago, and now another storm is on the way.  We see it coming, but there isn’t much we can do about it now.