1. CT Economic Outlook 2008:Q1 to 2012:Q4 Edward J. Deak, Ph.D. CT Model Manager, NEEP Professor of Economics Fairfield University Federal Reserve Bank of Boston, May 30, 2008

2. CT Economy in Decline March/April 2008 Status y Jobs: Peak 12/07, Jan-Apr 08 = -7.2k –Cuts: Trade, Bus Services, Mfg, Financial –Adds: Educ + Health, Gov, Leisure+Hospit yUE Rate %: 4.4=1-6/07, Apr 08=4.7 US=5.0 yState + Local Budgets: State deficit -$67m –Local $ cuts + layoffs, State deficit ’09? yCasino Revenues: Both 10%+ for slot $ yNew UE Claims: 7.6% from 4/07

3. CT Housing Market In Recession yPermits: 07=16.1% =7,746, 08Q1=15% –Peak: 05=11,885, 07 lowest # since 1991 ySales Existing: 07=12%, 08Q1=30% –Peak: 05=58.1k, 07=45.6k lowest since ‘96 yPrices: 07=2% to $320.6k, C-S 4qtrs ‘07 –08Q1=6% at $279,900, DOM=139 6% yForeclosure Filings: 08Q1=7,632 +303% ySubprime Del: 08Q1=27.1%, US=26.8%

4. Quadruple Economic Whammy for CT –Housing: prices + building recession + Tighter credit +Financial market freeze –Financial Sector: Bonus Income, # of job cuts, Wall St affects Main St –CT Energy Costs: Elec, gasoline, HHO $10,800 per yr per 4 person household. –Food Prices

5. Annual Job Change %: CT vs. U.S 2006-2012

6. Specific CT Job Changes yJob Additions: 27 firms at 4,301 jobs –Foxwoods Casino +2,300 in 08Q2=MGM –Mohegan Sun Casino +2,000 to 2010 –Royal Bank of Scotland +1,000 late 09Q2 –Yale-New Haven Hospital +400 08Q4 –Blue Sky +300 08Q4 yJob Cuts: 23 firms 1,728 jobs –Stevenson Lumber -400 08Q2 –Clairol -235 2010:Q1 –LifeTouch -225 08Q2 –Federal Reserve check clearing -146 09Q1

7. Job Changes Publicly Stated September 2007-April 2008

8. % Change CT Jobs: by Employment Sector 2007 2008 2009 2010 2011 2012 yMfg -1.1 -1.5 -0.5 0.4 -0.3 -1.1 yConst 2.0 -4.0 -6.5 -8.2 -4.2 1.7 yTrade 0.2 -0.4 -0.6 0.4 0.3 -0.3 yLeis/Hosp 2.3 1.5 -1.9 3.0 0.3 1.1 yEd/Hlth 2.8 1.9 2.1 2.9 2.5 1.8 yFin Serv 0.1 -5.1 -1.9 1.2 0.9 0.5 yBus serv 4.5 -1.6 -0.3 1.4 0.4 -0.2 yGovt 1.3 1.0 1.3 0.7 0.0 0.3

9. % Change in GDP: CT vs. U.S. 2005-2012

10. %  Real Personal Income CT vs. U.S. 2005-2012

11. CT v. U.S Home Permits: % Change 2002-2012

12. CT v. US Sales Existing Homes: % Change 2002-2012

13. CT v. U.S. Median Sale Price: % Change 2002-2012

14. CT Nom Per Income v. Median Sale Price: %  1981-2012

15. Who in CT is being Crunched by the Credit Crunch? yHousing: Home owners, buyers, contractors yJob Sectors: Fin serv, const, retail yState Budget: Surplus to Deficit yLocal Budgets: $ cuts + Layoffs yPrivate Charities: Food Banks, Social Service yCollege Students: w/priv funding sources yGaming: Foxwoods + Mohegan Sun Casinos

16. Summary + Observations yCT Economy in Cyclical Decline: –Job peak just above previous peak: 12/07 vs. 7/00 –Recovery Traction? Another “jobless recovery”? yRecession concerns: –Housing recession, credit freeze, financial losses –Higher energy + food costs, war costs, election? yCT Challenges: –Aging population (Boomers) + Youth Out-migration –Affordable housing +Transportation + Cities –Gaps: Worker skills + training, income distribution –High bus costs: Energy, labor, taxes, office space