December 14, 2018

Economist to NH: It's all on you

Photo | New Haven Biz
Photo | New Haven Biz
People's United Bank economist John Traynor Thursday.

John S. Traynor is chief investment officer for People's United Bank. Before that he was director of investment strategy for Hawthorn, a $22 billion hedge fund. His distinguished face is a fixture on CNBC and Fox Business, and he's regularly quoted in the Wall Street Journal and the New York Times. In other words, a certifiably Smart Guy.

So here's what Traynor had to tell the audience of some 225 business people at the New Haven Lawn Club during Thursday's Regional Economic Outlook Breakfast presented by the Greater New Haven Chamber of Commerce:

If Connecticut is to rebound from its decade-long doldrums in 2019, "The recovery will be driven by the New Haven engine," Traynor said.

But the prospects for a Connecticut economic rebound is a big "if." The U.S. economy is in its 10th year of expansion, Traynor said, having posted an aggregate 15.5-percent real gross domestic product (GDP) growth between 2007 and 2017. Over the same period, Connecticut's real GDP actually declined by 9.1 percent, according to the Bureau of Economic Analysis.

Connecticut an outlier

At 6.4-percent growth, ten-year economic performance in the six-state New England region significantly lagged the national economy. Even so, Connecticut was an outlier in its own region. New England's economic rebound between 2007 and 2017 has been paced by neighboring Massachusetts, where GDP surged by 16.4 percent — ahead of even the U.S. average.

Traynor described Connecticut's economic performance since the year before the recession began in 2008 as "terrible."

And GDP performance doesn't tell the whole story. Measuring changes in personal income, Connecticut ranked 44th among states in 2017, posting just a 1.5-percent increase against a national average of 3.1 percent.

"That Connecticut has done so poorly — while being between New York and Boston during a tremendous rally in financial assets — is especially disconcerting," Traynor said.

Likewise disconcerting is the reality that since peak employment Connecticut has lost a net 11,400 jobs. While the state has recovered 90 percent of all jobs lost during the recession, Traynor said, that recovery pales before the national average of 227 percent of jobs gained back — and even more compared to the Massachusetts figure of 350 percent of jobs.

Bay State bully?

How can neighbors Connecticut and Massachusetts, both deep-blue states with economies deeply rooted in financial services, health care and education, perform so differently?

For one thing, the Bay State can boast "a little engine called Cambridge," Traynor said, home to Harvard and MIT. Many new ideas, new technologies and new businesses developed and invented there "tend to stay there," he explained.

"New Haven needs to be our Cambridge," he said.

The GNHCC's annual event also featured a presentation on the impact of new tax legislation by Sean Keating, a partner with the accounting firm RSM US LLP.

Traynor's parting words to his New Haven audience: "People in Greenwich, people in Fairfield, are looking to you" for a brighter, more dynamic economic future for Connecticut. "The only place in Connecticut where we can recreate the Massachusetts Miracle is New Haven," said Traynor. "It's right here."

In other words, don't blow it.

Contact Michael C. Bingham at mbingham@newhavenbiz.com.

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