Predicting the direction of the economy is a notoriously tricky business, and it may be even more difficult than usual as we look further into 2020. That’s because the year ahead is full of political and financial uncertainty -- both for Connecticut and for the nation. Connecticut Public gathered thoughts and predictions from some of the state’s foremost economic thinkers.
Alissa DeJonge, Vice President of Research at the Connecticut Economic Resource Center.
DeJonge sees continuity between 2019 and 2020, with the nation continuing on a path of reasonable economic growth in this new year. For Connecticut, though, there will be both opportunities and disruptions, largely driven by technology.
“I think we’re going to see a lot of growth continuing in advanced manufacturing, especially for Connecticut,” she told Connecticut Public Radio. “We have a lot of niche industries here that are seeing a lot of demand. These industries are using technology and innovative materials in ways that haven’t been done before, and so there’s a lot of potential growth and upswing for a number of industries in advanced manufacturing.”
But technology won’t always help, particularly when it comes to generating jobs.
“On the flip side, in terms of an industry that we still see as a driver in Connecticut but is experiencing some change or disruption, we’re seeing that in insurance services,” said DeJonge. “Because of the use of technology and different algorithms and artificial intelligence, we’re seeing productivity in that industry increasing, but the need for workers we think is going to subside a bit.”
Professor Zachary Cohle of Quinnipiac University’s Department of Economics
Cohle said he’s cautiously optimistic about the economy as a whole, but he does see headwinds, particularly in the form of the unresolved trade war with China.
“If it continues going on, it’s going to cause a lot of friction in the markets,” he said.
And we’re already seeing the effects in our pocketbooks. “We’ve seen prices rise to the extent that the average household in America will have about $1,000 less this year, just due to the increase in prices,” Cohle explained. “Even things that are unrelated to the trade war now are seeing a little extra price increase, just due to the global ramifications.”
Cohle said in general, risk and uncertainty are bad for markets. Possible additional sources of risk this year include the continuing drama over impeachment and Britain’s imminent exit from the European Union.
Professor Eric Chen of the University of St. Joseph
“We are currently in a new age of consumerism,” said Chen. He believes this age will be dominated by four trends: convenience, efficiency, information and entertainment.
“We’ve become a very impatient people,” he explained. “Instant gratification is the name of the game. I fully expect that the companies that give us the convenience that we seek will be rewarded in the coming year.”
As for efficiency, “with the price of oil going haywire a couple of years back, we got very good at doing more with less. We got very good at getting things from A to B, we got good at cutting costs, we got good at logistics.”
But it’s not just about moving things, it’s about gleaning information. “We need to know what we’ve got and where it is. Companies need to know what’s on their trucks, where their trucks are,” he said. “This is big data and artificial intelligence at work. Retailers, they know a lot about us. They know what we bought last, how we bought it, when we bought it, they know how frequently we bought it, and in some cases they actually know what we want before we want it.”
That oversupply of information also comes with a downside, though. He believes companies will increasingly have to take the security of our information seriously.
Finally, entertainment. “With all of this free time that we’re going to have because of productivity gains and efficiency, we want to be entertained,” said Chen. “And this opens the door for content providers and library owners.”
Peter Gioia, Economic Adviser to the Connecticut Business and Industry Association
Gioia has one overriding prediction for 2020.
“For Connecticut, it’s still going to be struggling.”
He says the state saw weak job growth in 2019 at a 0.2% increase, versus a 1.5% increase around the nation.
“We’re still in an area where we’re struggling at subpar economic performance. I don’t see anything that’s out there that’s going to change that in 2020,” said Gioia. “It’s very likely the U.S. economy does not go into recession, but there is a possibility for Connecticut to do that.”
Weak job growth is just one of the risks for recession, along with weak growth in the state’s economic output and a continuing drain in population.
Despite an improvement in the state’s rainy day fund, he said Connecticut is still potentially looking at big budget deficits in years to come.
“It’s imperative for our policymakers to see the red flags that our economic situation is raising,” said Gioia, “and create an environment that will encourage businesses to invest in the state and create jobs.”