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Changing retail landscape, state politics to impact economy in 2018

BY Alissa K. DeJonge, Vice President of Research, Connecticut Economic Resource Center Inc.

12/22/2017

SCORECARD

What’s your 2018 economic outlook for Connecticut? 


Moderate Growth


How many jobs will Connecticut add? 


Approximately 5,000


What will Connecticut’s unemployment rate be at the end of 2018?


4%


What type of GDP growth will Connecticut see in 2018? 


3%


Which industry will add the most jobs? 


Wholesale/logistics


Which industry will lose the most jobs?


Retail

There are many industry trends that will affect Connecticut's economy in 2018 leading to slow to moderate growth.

Consumers are not spending less on goods and services, but the method in which they shop has changed. The rapid growth of e-commerce has increased demand for warehouse space and fulfillment centers in locations that give capacity to respond to online orders and deliver products quickly. There is also a change in consumer preferences away from purchasing durable goods such as heirloom furniture, particularly as young professionals prefer to rent apartments rather than buy houses, and toward experiences such as vacations and going out to eat.

Traditional storefront retailers that remain solvent during this transition will adopt a hybrid approach of retaining less inventory on-site and enhancing the shopping social experience. There are some higher-end retailers that are already making this transition well, and if more can join in, it will mitigate employment losses.

A recent Credit Suisse report projects that more than 8,600 U.S. retail stores will close in 2017, which would be more than the number that closed at the height of the 2008-09 financial crisis.

The need to be nimble is also a must for the insurance industry, which is why mergers and acquisitions are on the rise. Deloitte sites long-term trends that require insurers to be innovative to stay ahead of changing conditions, including the increased threat of cyberattacks.

Employment for defense manufacturing continues to be strong, as Electric Boat fulfills its ongoing federal contract for five new submarines. On the other hand, local government employment will remain flat or decrease as municipalities deal with the realities of different funding amounts from state government.

Statewide politics in 2018 will influence the economy. Currently there is a shift in decision-making power away from the executive branch and toward the legislative branch, with our current governor not running for re-election.

The outcome of the statewide gubernatorial election may provide much change in 2019 and beyond, depending upon the dominant parties in the executive and legislative branches.

Read more forecasts here.