The Connecticut Economy
Presented to the Connecticut Tax Study PanelSeptember 16, 2015
Manisha Srivastava, Budget AnalystCT Office of Policy and Management
Outline
• Population Summary and Trends
• Employment Profile: 1950 - 2010
• Economic Prosperity of the 1980’s
• The Era of Slow Growth
• Pre and Post the Great Recession• Employment• Gross State Product• Connecticut compared to the United States
• Connecticut’s Exports and Defense Industry
• Regional Analysis 2
Population Summary
3Source: Census Bureau State & Local QuickFacts
Population2014 3,596,6772013 3,599,341
Race and Ethnicity^White 81.6%Black or African American 11.3%Asian 4.3%American Indian, Native Hawaiian and Other Pacific Islander 0.6%Hispanic or Latino 14.7%
Foreign born persons* 13.60%Language other than English spoken at home* 21.50%
Households*Households 1,355,849Persons per household 2.55Median household income $69,461 Persons below poverty level 10.2%
^ 2013
* 2009 - 2013
Population Trends
0%
5%
10%
15%
20%
25%
30%
1930 1940 1950 1960 1970 1980 1990 2000 2010
Po
pu
lati
on
Gro
wth
United States Connecticut
Source: 2015 Economic Report of the Governor
Population growth in Connecticut has slowed compared to the nation since the 1970’s
4
Population Trends
0%
5%
10%
15%
20%
25%
30%
1930 1940 1950 1960 1970 1980 1990 2000 2010
Po
pu
lati
on
Gro
wth
New England Connecticut
Source: 2015 Economic Report of the Governor
Connecticut’s population growth has been similar to New England over the last few decades
5
Population Trends
Share of Population by Age Group
Connecticut United States
Age Groups 1994 2004 2014 1994 2004 2014
0 thru 4 6.9% 6.1% 5.3% 7.2% 6.8% 6.2%
5 thru 14 13.1% 13.9% 12.2% 14.3% 13.9% 12.9%
15 thru 24 13.2% 12.8% 13.7% 14.5% 14.3% 13.8%
25 thru 34 15.9% 11.9% 12.3% 16.0% 13.4% 13.6%
35 thru 44 16.1% 15.9% 12.3% 15.5% 14.9% 12.7%
45 thru 54 12.1% 15.1% 15.1% 11.4% 14.2% 13.6%
55 thru 64 9.0% 10.6% 13.5% 8.5% 10.1% 12.6%
65 & Older 13.6% 13.6% 15.6% 12.5% 12.4% 14.6%
Source: IHS6
Population Trends
Share of Population by Age Group
Percentage Points difference between Connecticut and the United States
Age Groups 1994 2004 2014
0 thru 4 -0.4 -0.6 -1.0
5 thru 14 -1.2 -0.1 -0.7
15 thru 24 -1.2 -1.5 -0.1
25 thru 34 -0.1 -1.5 -1.3
35 thru 44 0.7 1.0 -0.4
45 thru 54 0.7 0.9 1.5
55 thru 64 0.5 0.6 1.0
65 & Older 1.2 1.2 1.0
Source: IHS
Connecticut is older compared to the United States
7
Population Trends
Share of Population by Age Group
Percentage Points difference between Connecticut and New England
Age Groups 1994 2004 2014
0 thru 4 0.1 0.2 0.0
5 thru 14 0.0 0.6 0.7
15 thru 24 -0.8 -0.8 -0.1
25 thru 34 -0.3 -0.5 -0.5
35 thru 44 0.1 0.2 0.1
45 thru 54 0.4 0.0 0.3
55 thru 64 0.3 0.0 -0.2
65 & Older 0.2 0.2 -0.2
Source: IHS
Compared to New England, Connecticut has a higher share of 5-14 year olds a smaller share of 25-34 year olds
8
Population Trends
-30%
-20%
-10%
0%
10%
20%
30%
40%
Connecticut Population Growth by Age Group
2004 2014Source: IHS
Some of the trends exhibited in Connecticut are caused by natural demographic changes
9
Employment Profile: 1950 - 2010
10
Total non-farm employment growth in Connecticut has slowed compared to the nation since the 1970’s
Total Non-Farm Employment (in Thousands)
1950 1960 1970 1980 1990 2000 2010
Connecticut
Total 766.1 915.4 1,197.5 1,426.8 1,623.5 1,693.1 1,608.0
Growth 26.7% 19.5% 30.8% 19.1% 13.8% 4.3% -5.0%
United States
Total 45,197 54,189 70,880 90,406 109,403 131,720 130,275
Growth 39.7% 19.9% 30.8% 27.5% 21.0% 20.4% -1.1%
Source: Bureau of Labor Statistics
Note: Not Seasonally Adjusted, based on the Standard Industrial Classification system
Employment Profile: 1950 - 2010
11
0%
20%
40%
60%
80%
100%
1950 1960 1970 1980 1990 2000 2010
Connecticut’s Industry Share of Total Employment
Total Government
Services
Finance, Insurance, and
Real Estate
Trade
Transportation And
Public Utilities
Manufacturing
Construction & Mining
Source: Bureau of Labor Statistics
Note: Not Seasonally Adjusted, based on the Standard Industrial Classification system
Employment Profile: CT versus the US
12
ManufacturingFinance, Insurance, And
Real Estate Government
1950 2010 1950 2010 1950 2010
Connecticut 49.6% 12.2% 4.8% 8.4% 8.6% 15.2%
United States 33.7% 10.9% 4.2% 5.9% 13.3% 17.3%
Manufacturing has fallen dramatically, while Finance and Government has grown stronger than the US
Source: Bureau of Labor Statistics
Note: Not Seasonally Adjusted, based on the Standard Industrial Classification (SIC) system
Note: Percent of total non-farm employment
Economic Indicators: GSP and PI
Per Investopedia.com:
• Gross Domestic Product (GDP) and Gross State Product (GSP):• The monetary value of all the finished goods and services produced within a
country's borders in a specific time period• GDP = private and public consumption + government outlays + investments +
exports - imports• Put simply, GDP is a broad measurement of a nation’s overall economic activity
• Personal Income (PI):• Total compensation received by an individual• Personal income = salaries + wages and bonuses received from employment or
self-employment + dividends and distributions received from investments + rental receipts from real estate investments + profit-sharing from a business
• Capital Gains is not included in Personal Income• Personal income is generally computed on a pre-tax basis.
13Source: Investopedia.com
Economic Prosperity of the 1980’s
14
-$15,000
-$10,000
-$5,000
$0
$5,000
$10,000
$15,000
$20,000
-30%
-20%
-10%
0%
10%
20%
30%
40%
1961-1970 1970-1980 1980-1990 1990-2000 2000-2010
$ D
iffe
ren
ce -
Per
Cap
ita
GD
P /
PI
% D
iffe
ren
ce -
GD
P /
PI
Gro
wth
Gross Domestic Product and Personal Income
Percentage Points difference between CT and the US
Difference in GDP Growth Difference in PI Growth
Difference in Per Capita GDP Difference in Per Capita PI
Source: IHS, Bureau of Economic Analysis
Economic Prosperity of the 1980’s
• Connecticut gained 234,100 jobs, or 16.2% of employment between July 1981 to February 1989.
• Employment change by sector:• Services 60%• Trade 30%• Finance, Insurance, and Real Estate 20%• Manufacturing -35%
• GDP change by sector:• Finance, Insurance, and Real Estate 30%• Services 22%• Trade 14%• Manufacturing 13%
15Source: Bureau of Labor Statistics, Bureau of Economic Analysis
The Era of Slow Growth
Source: Moody’s Economy.com and the Bureau of Labor Statistics
500
700
900
1,100
1,300
1,500
1,700
1,900
1939
1942
1945
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
Em
plo
ym
ent
(in
Th
ou
san
ds)
Connecticut Total Nonfarm Employment
16
The Era of Relative Slow Growth: 1992-2015
Connecticut and New York grew at the same pace out of the early 1990’s recession; CT has since fallen behind
Source: Bureau of Labor Statistics17
111%
124%
120%
116%
95
100
105
110
115
120
12519
92
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2007
2008
2009
2010
2011
2012
2013
2014
Dec
emb
er 1
992
= 10
0
Connecticut Massachusetts New York New Jersey
Employment Indexed to 1992 for CT, MA, NY, and NJ
The Era of Relative Slow Growth: 1970-2014
A longer term view shows Connecticut’s employment growth outpaces New York, but falls short of NJ and MA
Source: IHS18
139%
127%
152%
90
100
110
120
130
140
150
16019
70
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
1970
= 1
00
Connecticut Massachusetts New York New Jersey
Employment Indexed to 1970 for CT, MA, NY, and NJ
The Great Recession
• The Great Recession lasted from March 2008 to February 2010 in Connecticut
• Connecticut lost 119,000 jobs, or 6.9% of employment
• As of July 2015, Connecticut has regained 102,000 jobs, or 85.7% of the total jobs lost during the recession
• Connecticut’s private sector has replenished 108,200 jobs, or 97.0% of the 111,600 private sector jobs lost during the recession
• The rate of job growth has picked up in the last year, with over 30,000 jobs created since July 2014
Source: Connecticut Department of Labor and the Bureau of Labor Statistics19
The Great Recession
• The United States lost 8.7 million jobs, or 6.3% of employment during the Great Recession. As of April 2014, the US had recovered the number of jobs lost from the recession.
• Connecticut’s unemployment rate peaked at 9.2% during the recession
• As of July 2015, Connecticut’s unemployment rate is 5.4%
• The United States reached 10% unemployment during the recession; as of July 2015 the nation’s unemployment rate was 5.3%
• As of January 2015, the number of residents employed in CT surpassed its pre-recession peak, and at 1,809,191 is currently at its highest level ever
Source: Connecticut Department of Labor and the Bureau of Labor Statistics20
The Great Recession: Employment
-$180
-$120
-$60
$0
$60
$120
$180
-30
-20
-10
0
10
20
30
●A
ver
age
Wag
e (i
n T
ho
usa
nd
s)
Em
plo
ym
ent
(in
Th
ou
san
ds)
Connecticut's Jobs: Recession, and Recovery, and Average Annual Wage
Recession Recovery Average Wage
Industries with the lowest average wage are leading Connecticut’s employment recovery from the recession
Source: Bureau of Labor Statistics21
Note: Recession (Mar 2008-Feb 2010), Recovery (Feb 2010-May 2015), and 2014 Average Annual Wage
Pre/Post the Great Recession: Employment
Construction
Manufacturing
Wholesale
Trade
Retail Trade
Transportation &
Utilities
Information
Finance &
Insurance
Real Estate
Prof., Sci., & Tech.
Services
Mgmt. of Companies
Admin & Support
Educational Services
Health Care Services
Leisure &
Hospitality
Other Services
Government
-10%
-5%
0%
5%
10%
15%
20%
25%
-10% -5% 0% 5% 10% 15% 20% 25%
Gro
wth
Pre
-Rec
essi
on
(S
ep. 2
003
-M
ar. 2
008)
Growth Post-Recession (Feb. 2010 - May 2015)
Connecticut Employment Growth by Industry
Source: Bureau of Labor Statistics22
Note: Size of bubble = May 2015 share of employment
Pre/Post the Great Recession: Employment
Construction
ManufacturingRetail Trade
Prof., Sci., & Tech.
Services
Mgmt. of Companies
Admin & Support
Leisure &
Hospitality
-10%
-5%
0%
5%
10%
15%
20%
25%
-10% -5% 0% 5% 10% 15% 20% 25%
Gro
wth
Pre
-Rec
essi
on
(S
ep. 2
003
-M
ar. 2
008)
Growth Post-Recession (Feb. 2010 - May 2015)
Industries Growing Faster (or Shrinking Slower) Post-Recession
Source: Bureau of Labor Statistics23
Note: Size of bubble = May 2015 share of employment
Pre/Post the Great Recession: Employment
Wholesale
Trade
Finance &
Insurance
Educational Services
Government
-10%
-5%
0%
5%
10%
15%
20%
25%
-10% -5% 0% 5% 10% 15% 20% 25%
Gro
wth
Pre
-Rec
essi
on
(S
ep. 2
003
-M
ar. 2
008)
Growth Post-Recession (Feb. 2010 - May 2015)
Industries Growing Slower Post-Recession
Source: Bureau of Labor Statistics24
Note: Size of bubble = May 2015 share of employment
Connecticut Employment (2014)
25Source: Bureau of Labor Statistics
Construction and
Mining, 3.4%Manufacturing, 9.6%
Trade,
Transportation, and
Utilities, 18.1%
Information, 1.9%
Financial Activities,
7.7%
Professional and Business
Services, 12.7%
Education and
Health Services,
19.5%
Other Services, 3.8%
Leisure and
Hospitality, 9.1%
Government, 14.3%
Note: Connecticut 2014 total non-farm employment = 1,665,700
Connecticut Real GSP (2014)
Source: IHS26
Note: Connecticut 2014 Real GSP = $232,620 Million (chained 2009 $)
Construction and
Mining, 3.1%
Manufacturing,
10.8%
Transportation,
Trade, & Utilities,
14.5%
Information, 5.4%
Financial Activities,
29.0%
Professional &
Business Services,
12.5%
Education & Health
Services, 9.8%
Other Services, 1.9%
Leisure &
Hospitality, 2.8%
Government, 10.2%
Pre/Post the Great Recession: GSP & PI
Connecticut’s Real GSP and PI growth has slowed from about 16% pre-recession to 1% and 7%, respectively
Source: IHS27
Pre-Recession Post-RecessionConnecticut Real GSP (Millions of 2009 $) 2003 2007 2010 2014Total $211,900 $245,764 $230,268 $232,620
Change $33,864 $2,352Growth 16.0% 1.0%
Connecticut Real PI (Millions of 2009 $) 2003 2007 2010 2014Total $157,606 $183,065 $178,044 $190,557
Change $25,460 $12,514Growth 16.2% 7.0%
United States 2003 2007 2010 2014Real GDP Growth 12.1% 8.0%Real PI Growth 14.0% 9.7%
Note: Real indicates adjusted for inflation, here in 2009 constant dollars
Pre/Post the Great Recession: GSP
There has been a shift in the industries driving GSP from pre-recession to post-recession
28Source: IHS
Pre-Recession Post-RecessionReal GSP (Millions of 2009 $) 2003 - 2007 2010 - 2014Manufacturing $11,101 -$3,371Finance & Insurance $7,816 -$2,604Government $1,336 -$274Other Services $264 -$25Construction and Mining -$50 $27Educational Services $210 $155Wholesale Trade $2,919 $213Transportation & Utilities $1,459 $438Administrative & Support $1,139 $555Health Care $1,211 $636Leisure & Hospitality $77 $691Retail Trade -$525 $775Real Estate $2,647 $856Prof., Sci., and Tech. Services $50 $1,185Information $3,741 $1,512Management of Companies -$394 $1,865
Total Real GSP Change $33,864 $2,352Note: Industries do not add to total
Post Recession – CT versus the US
-10%
0%
10%
20%
30%
Employment Gains by Industry Post-Recession (Feb 2010-May 2015)
Connecticut United States
Connecticut’s employment growth by industry is similar to the nation, except in a few key industries
Source: Bureau of Labor Statistics29
Post Recession – CT versus the US
Unlike Connecticut, the nation is growing in employment and GDP from Manufacturing and Finance & Insurance
Source: Bureau of Labor Statistics, Bureau of Economic Analysis
-15%
-10%
-5%
0%
5%
10%
15%
Emp. GDP Emp. GDP
Manufacturing Finance & Insurance
Industries Lagging the US Post-Recession
Connecticut United States
30Note: Employment (February 2010 – May 2015) and GDP (2010 - 2014)
Post Recession – CT versus the US
Mgmt. of Companies in CT leads the nation by 1.5 and 6 percentage points, respectively, in emp. and GDP growth
Source: Bureau of Labor Statistics, Bureau of Economic Analysis31
0%
5%
10%
15%
20%
25%
30%
35%
40%
Emp. GDP Emp. GDP Emp. GDP
Mgmt. of Companies Leisure and Hospitality Health Care
(Select) Industries Leading the US Post-Recession
Connecticut United States
Note: Employment (February 2010 – May 2015) and GDP (2010 - 2014)
Connecticut’s Leading Export Markets (2014)
32
France, 13.9%
Canada, 11.9%
Germany, 10.7%
Mexico, 8.0%
United Arab
Emirates, 7.2%China, 5.7%
United
Kingdom, 4.5%
Republic Of
Korea, 4.2%
All Other, 33.9%
Source: WISERTrade
Note: Connecticut 2014 total exports = $15.9 billion
Connecticut’s Export Industry Leaders (2014)
33Note: Connecticut 2014 total exports = $15.9 billion;
Source: WISERTrade
Transportation
Equipment, 45.9%
Machinery, Except
Electrical, 13.0%
Computer And
Electronic Products,
8.0%
Electrical Equipment,
Appliances, And
Component, 6.4%
Chemicals, 6.1%
Fabricated Metal
Products, Nesoi*, 4.6%
Primary Metal
Manufacturing, 4.0%
All Other, 12.1%
* Not Elsewhere Specified or Included
Connecticut’s Defense Industry
34
• In Federal Fiscal Year 2013:
• Connecticut based firms received $10.0 billion in prime contract awards
• These total awards accounted for 3.7% of national total awards
• Connecticut ranked 8th in total defense dollars awarded
• Connecticut ranked 2nd in per capita dollars awarded among the 50 states
• In Fiscal Year 2013, defense contract awards made up 4.8% of Connecticut’s GSP*
Source: United States Department of Defense
* Based on a three year moving average of defense contract awards
Regional Analysis
Connecticut’s population is concentrated in three counties, but the state overall is highly educated and well-off
Source: Census Bureau State & Local QuickFacts35
CT Fairfield HartfordLitch-field
Middle-sex
New Haven
New London
TollandWind-ham
Population^ 3,596.7 945.4 898.0 185.0 164.9 861.3 273.7 151.4 117.0
High School* (%) 89.2 89 88.1 91.3 93.8 88.3 90.5 93 86.8
Bachelors* (%) 36.5 44.8 34.9 36.5 39.1 32.9 31.3 36.9 22.3
Median Household Income* ($)
69,461 82,283 64,967 69,461 76,994 61,996 69,461 80,529 59,333
GSP^ ($M) 253,036 93,502# 86,609 44,165#Brideport Stamford Metropoliatan Statistical Area (MSA)
^ 2014
* 2009 - 2013
In Conclusion
• Connecticut’s population and employment growth slowed compared to the national average during the 1970’s
• Connecticut’s population is older compared to the nation• Connecticut’s economy flourished (based on PI, GSP, and employment growth)
during the 1980’s, but has not matched that level of growth since• Since the end of the recession:
• Manufacturing continues to fall (a trend that started in the late 1960’s)• Connecticut’s powerhouse - Finance & Insurance – has fallen in employment and economic
output
• Similar to the nation, sectors with stronger job growth have tended to be in lower wage sectors• However, the high-wage Management of Companies and Professional, Scientific, and
Technical Services have been growing strongly post-recession
• Connecticut’s rate of job growth has increased with over 30,000 jobs created in the last year, and the number of residents employed is at its highest level ever
36