With a volatile stock market that has set all-time records in 2024 and a low unemployment rate, Connecticut’s economy is doing well in certain sectors.
But state officials and business owners are looking ahead to 2025 in search of solutions to long-running issues by trying to provide increased job creation, more affordable housing, reduced electricity rates, and lower grocery prices.
The state’s unemployment rate dropped from 3.9% down to 3.4% for August, marking seven straight months of job growth as private sector employment reached an all-time high. That also came with private sector wages being increased by 4.5% on a year-over-year basis. At the same time, wealthy Wall Street investors, particularly in Fairfield County, have racked up huge gains as the S&P 500 – while volatile – reached record heights more than 35 times in the year’s first eight months.
But the economy remains mixed as one of the biggest challenges in Connecticut is filling the jobs that are available. That has been an issue for several years, and there are currently 93,000 job openings that need to be filled, officials said.
The problem is that about half of those jobs do not require a bachelor’s degree, and the high schools are not training enough skilled workers in the trades. Instead, the students need internships and apprenticeships for various industries, including manufacturing.
“We have very much a college-or-bust education system,” said Chris DiPentima, president and chief executive officer of the Connecticut Business and Industry Association. “One third of our high school students who graduate every year don’t go to a two-or-four-year college and don’t go to the military. There’s this mismatch. The job openings are there, and the entry-level jobs are there, but they’re just not getting anything during their high school education relative to preparing them for these jobs. … There has been too many Band-Aid approaches.”
The CBIA Foundation recently spent about a year creating a detailed, long-term blueprint for the state’s economy that cites multiple issues that need to be tackled for improvements for economic competitiveness. That included about 30 forums on issues like workforce, education, and quality of life, among others.
“We’re known as an incredible education state,” DiPentima said, “but we’ve really got to catch up to the times and make it so the education system is more aligned to the career opportunities, rather than just the college opportunities.”
Electric rates and housing
Another problem is high electricity costs, which caused an outcry in July during a month of blistering heat and humidity that led to high usage of air conditioning that increased the number of kilowatt hours for many customers.
In addition, housing costs are still too high for many young couples as first-time homebuyers, even though mortgage rates have come down slightly from their peak in October 2023 that was the highest level in more than two decades.
The Connecticut economy is closely aligned with the national economy, which is still running relatively strong. The latest updated numbers say that the national gross domestic product gained by 3% in the second quarter, compared to the original estimate of 2.8% as consumer spending remained strong. The third quarter increase could be 2%, according to various estimates as many analysts say that a recession is not imminent. In addition, as the stock market has risen, Fidelity Investments reported that there is a record number of 401 (k) millionaires.
COURTESY OF CONNECTICUT BUSINESS AND INDUSTRY ASSOCIATION
Connecticut Business and Industry Association chief executive officer Chris DiPentima chats in 2022 about the state economy with Gov. Ned Lamont at a business forum. (Contributed)
Changing times
One of the important issues in dealing with the Connecticut economy is understanding the changing times in the post-COVID era, said David Griggs, president and chief executive officer of the Metro Hartford Alliance.
As the economy changes, so must recruitment efforts, he said. In the old days, Hartford could rely on insurance giants like Aetna, Travelers, and The Hartford to hire an additional 500 employees at various times in good-paying jobs.
“That’s kind of over,” Griggs told The Courant in an interview.
Instead, the regional alliance is now concentrating on recruiting smaller insurance technology companies in the InsurTech Corridor that has ties to Great Britain. Ten companies have already pledged to create offices in Hartford, and they typically have anywhere from five to 15 employees.
Another change is that the remote workforce has had a direct impact on restaurants as foot traffic has decreased on some days in downtown Hartford, where some prominent buildings have been facing foreclosure. On Fridays, for example, many employees are working from home, causing a sharp shift in how businesses make money.
“I remember Friday happy hours,” Griggs said. “When was the last time that you heard of a Friday happy hour? Places that used to rely on those Friday happy hours, they can’t any more. If you’re still trying to make your money on a Friday happy hour, you’re going to go out of business. The restaurants and retail that we’ve got, through the Hartford Chamber of Commerce, we’re working hard to create packaged experiences for people, the opportunity for you to catch dinner and a show. We work with Hartford Stage and the Wolf Pack. We just need to rethink how we use our restaurants and those establishments.”
Griggs added, “At the end of the day, I’m still very bullish on Hartford. We were ranked number seven in the country for fintech and InsurTech that came out a few weeks ago. When you see that we’re in the top 10 in talent in the U.S., we’re moving on to the new thing.”
Christopher Keating can be reached at [email protected]
