1. The Connecticut Economy Will Recovery Last?
September 9, 2004
Rocky Hill, Connecticut
Bruce Blakey
Northeast Utilities

2. 1. The “goodness” of economic news depends on who you are
1. The “goodness” of economic news depends on who you are. (Where you stand depends on where you sit.)
Tight labor markets are bad for business, but good for job seekers.
Higher interest rates are good for savers, bad for borrowers.
“Higher oil prices are good for New Mexico, said Tom Clifford, chief economist with the state’s Taxation and Revenue Department. … If oil prices remain higher than last year, Clifford said it could be a windfall for the state.” (Roswell Daily Record )

3. 2. Employment, per capita income, housing prices, etc
2. Employment, per capita income, housing prices, etc. vary greatly within Connecticut.

4. Unemployment Rate July 2004
3. Employment growth in Danbury and Hartford demonstrate the extremes. (Source: CT DOL)
Area
Employment 2004/2003
Unemployment Rate July 2004
Connecticut
0.0%
4.9%
Bridgeport
-0.4%
5.9%
Danbury
0.7%
3.4%
Hartford
-1.4%
5.3%
New Haven
-0.2%
5.0%
New London
0.1%
4.2%
Stamford
2.9%
Waterbury
0.6%
6.3%
U.S.
1.1%
5.5%

5. 4. Electric usage clearly indicates that economic growth has returned, but may have leveled-off. (Source: NE ISO)

6. 5. Total jobs return to the 2000 peak in 2006. (Source: NU)

7. 6. The annual increase of Connecticut housing prices is strong, but not unprecedented. (Source: OFHEO)

8. 7. Residential permits remain stable and well below boom levels
7. Residential permits remain stable and well below boom levels. (Source: NU)

9. 8. Personal income has been growing since 2002. (Source: NU)

10. 9. Real manufacturing GSP swooned in 2001, but is growing now
9. Real manufacturing GSP swooned in 2001, but is growing now. (Source: NU)

11. 10. The Connecticut Outlook Jobs lag income growth. (Source: NU)
2003
2004
2005
Population
0.7%
0.6%
Personal Income
0.5%
2.4%
3.0%
Total Employment
-1.3%
1.8%
Manufacturing Employment
-5.5%
-2.1%
0.1%
Non Manufacturing Employment
-0.7%
0.8%
2.0%
Housing Permits
10,400
10,700
9,300

12. 11. Even the low U.S. outlook indicates moderate growth.
2005
(Source: NU/GI)
Low
Base
High
Real GDP
2.0%
3.6%
4.3%
Oil-WTI $/Barrel
$40
$35
$31
Employment
0.9%
1.7%
Personal Income
4.8%
5.2%
5.5%

13. Very Gross Annual Connecticut Impact
12. Higher energy prices are an economic drag, but overwhelmed by wealth gains. (Source: BGB)
Event
Very Gross Annual Connecticut Impact
10% Energy Price Change
~$150 Per Oil Heat
~$100 Per Vehicle
~$900 Million Total
Median Sales Price Existing Home
New Haven-Meriden Q1 2004
$13,600 Gain Per Housing Unit
~6 Billion Total
One-year Change in Wilshire 8/27/04
~$16 Billion Total

14. 13. Connecticut gets fewer jobs, but they are high paying.
Sources: NU, GI & NEEP
2003 Per Capita Income
Employment Growth Rate
Personal Income Growth Rate
Connecticut
$38,500
1.2%
4.7%
New England
$33,900
1.5%
5.0%
U.S. Total
$28,000
1.7%
5.3%

15. Overall Cost of Living Index Difference from I-91 Corridor
14. Our cost of living is above the national average, but low compared with New York and Boston. (Source:
Overall Cost of Living Index
Index
Difference from I-91 Corridor
Nation
100.0
-13.4%
I-91 Corridor
115.5
0.0%
Hartford
106.0
-8.3%
New Haven- Meriden
122.3
5.9%
New York
225.3
95.0%
Boston
144.0
24.6%

16. 15. Affordable housing is a major impediment to growth. (Source: BGB)

17. 16. Materials, services and labor which are expensive in Connecticut (+5 to +25%) dominate costs, but all costs matter.
Components of Costs
Manufacturing
Commercial Services
Materials & Services
62%
38%
Labor
25%
41%
Indirect Business Taxes 2%
Electricity 3%
Other Energy
Other Costs
(Sources: NY State Energy Plan, IRS & BGB) 5%
15%

18. 17. Connecticut is competing through higher productivity demonstrated in part by KWh per worker. (Source: BGB)

19. 18. Connecticut service jobs increase, manufacturing jobs continue to decline. (Source: NU)
000’s of Jobs
1975
2003
2014
Total
1220
1644
1820
424
177
Mfg
349
200
189
-149
-10
Non Mfg
871
1444
1631
573
187
Trade
190
257
268 67 11
Services
306
647
790
342
143
Gov’t
178
246
258 68 12

20. 19. Medical Devices, an upcoming industry, are therapeutic and/or diagnostic devices i.e. not drugs.
Surgical Artificial hips/knees
Catheters Neural stimulators
Coronary stents Medical lasers
Pacemakers Biosensors
Prosthetic limbs Imagining Systems
X-ray machines Artificial organs
CT Scanners Biomaterial
MRIs
Up & Coming: Drug-eluding stents, Implantable debrifillators, Neurostimulation devices, Nanoscale biosensors Cardiac rhythm management devices, Home & self-care technologies, Tissue-engineered components & Less-invasive hip replacements
(Source: Biomedical Engineering Alliance & Consortium, The Medical Device Industry in Southern New England’s I-91 Corridor)

21. 20. The Northeast has 28% of the nation’s medical device manufacturing workforce. (Source: BEACON)

22. 21. The I-91 Corridor is the 17th largest metro area medical device employer. (Source: BEACON)

23. 22. The I-91 Corridor medical device L.Q. is 1.89. (Source: BEACON)
Medical Device Manufacturing Employment in U.S. Metro Areas (Top-20)
LQ:

24. 23. There are numerous medical device employers across New England
23. There are numerous medical device employers across New England. (Source: BEACON)

25. 24. Summary Comments
The national economy is growing, but employment growth is lackluster.
We lag the nation with weak job growth, but high wages.
The greatest risks relate to international crises and energy shocks.
Connecticut can’t compete on costs, but there are highly productive industries that should be nurtured.
The future hasn’t happened yet, so this forecast could be very wrong.