PBCT Connecticut Connecticut
Economic OverviewEconomic Overview
“Recovery Underway?”“Recovery Underway?”May 2002
Todd P. Martin1st VP & Chief Economist
People’s Bank203.338.4826 [email protected]
Todd P. Martin:Todd P. Martin:
PBCT
US Economic Outlook - 2002:• The Recession is over - mild recovery underway
• Fed aggressively cut fed funds to 1.75% last year - lowest since 1961 - Not expected to tighten until the summer of 2002, at the earliest.
• Economy responding to lower interest rates, stimulative fiscal policy, lower energy costs, and a swing in inventories.
• Unemployment rate still expected to rise through mid-2002
• Risks to the downside: Additional terrorist attack - Escalating unrest in the Middle East - rising oil prices - risk of synchronized global recession - ‘Enronitis’ - weak corporate profits - delayed capital spending
PBCT
Recession may have been the mildest on record?Recession may have been the mildest on record?
Source: BEA, Conference Board People’s Bank
Real Chain Weighted Gross Domestic Product Growth - % change SAR
3.1
1.7
4.7
8.3
2.4
5.7
1.31.9
1.30.3
-1.3
1.7
5.8
3.0 3.03.8
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
2nd Q 2002-4th Q 2002 are forecast
PBCT
CT Economic Outlook - 2002:
• CT economy not immune to recession but out-performs in terms of income growth & the unemployment rate
• Do not expect repeat of 1990s recession due to more diversified employment mix (defense a stabilizing factor) - balanced real estate markets - State fiscal position - banks have adequate capital & credit available
• CT has lost 28,500 jobs since 7/00 (1.7%) - Unemployment rate currently 3.5% rises to 4.0%-4.5% later this year.
• Risks: National recovery - continued Bear Market - high costs - deteriorating fiscal condition - exposure to energy shocks
PBCT
People's Bank Business Barometer stallsPeople's Bank Business Barometer stalls
Source: People’s Bank, Centerprise Advisors
People's Bank Business Barometer - 1992=100
Transformation: Level Source: Centerprise Advisors, User
50.0
58.3
66.7
75.0
83.3
91.7
100.0
108.3
116.7
125.0
69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01
PBCT
PBBB YOY shows worst may be over for CT?PBBB YOY shows worst may be over for CT?
Source: People’s Bank, Centerprise Advisors
People's Bank Business Barometer - (YOY % change)
Transformation: %Chg, YA Source: Centerprise Advisors, User
-1
-2
-3
-4
-5
0
1
2
3
4
5
90 91 92 93 94 95 96 97 98 99 00 01 02
PBCT
Quarterly change in PBBB turned negative in 2001Quarterly change in PBBB turned negative in 2001
Source: People’s Bank, Centerprise Advisors
People's Bank Business Barometer - (Quarterly % change)
Transformation: %Change Source: Centerprise Advisors, User
-0.5
-1.0
0.0
0.5
1.0
1.5
98 99 00 01 02
PBCT
CT has lost 28,500 jobs since mid-2000CT has lost 28,500 jobs since mid-2000
Source: BLS, CT Labor Department
Connecticut, Employment, Total Nonagricultural
Transformation: Level Source: Bureau of Labor Statistics
1600.0
1613.9
1627.8
1641.7
1655.6
1669.4
1683.3
1697.2
1711.1
1725.0
98 99 00 01 02
(Thousands)
PBCT
Both US & CT employment down 1% YOYBoth US & CT employment down 1% YOY
Source: BLS, CT Labor Department
Non Farm Employment - CT vs. US YOY% Change
US Employment YOY% CT Employment YOY%
-1
-2
-3
-4
-5
0
1
2
3
4
5
6
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
PBCT
CT has lost over 40% of its man. jobs since 1984CT has lost over 40% of its man. jobs since 1984
Source: BLS, CT Labor Department
Connecticut, Employment, Manufacturing
Transformation: Level Source: Bureau of Labor Statistics
200
250
300
350
400
450
82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
(Thousands)
PBCT
CT Service employment is up nearly 80% since 1984CT Service employment is up nearly 80% since 1984
Source: BLS, CT Labor Department
Connecticut, Employment, Services
Transformation: Level Source: Bureau of Labor Statistics
200.00
300.00
400.00
500.00
600.00
82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02
(Thousands)
PBCT
Biggest job losses in Hartford & Bridgeport LMA’sBiggest job losses in Hartford & Bridgeport LMA’sChange in non-farm employment Mar. 2002 vs. Mar. 2001 (NSA)
-12,300
-4,000
-2,300
-800
-300
-200
300
300
500
2,200
-15,000 -10,000 -5,000 0 5,000
Hartford
Bridgeport
Stamford
Danbury
Danielson
Waterbury
Lower River
New Haven
Torrington
New London
Source: CT Labor Dept.
PBCT
Hardest hit employment sectors in CTHardest hit employment sectors in CT
-6,600
-2,900
-2,800
-2,400
-2,100
-1,200
-1,200
-1,100
-1,000
-700
-600
-600
-600
-500
-500
-9,000 -8,000 -7,000 -6,000 -5,000 -4,000 -3,000 -2,000 -1,000 0
Business Services
Machinery & Computer Equipment
Electronic & Elec. Equipment
Faricated Metals
Printing & Publishing
Primary Metals
Instruments
Other Non Durable Manufacturing
Other Transportation
Insurance
Utilities
Legal & Professional Services
Federal Government
Communications
Personal Services
Change in CT Non-Farm Employment Mar. 2002 vs. Mar. 2001 ( Not SA)
Source: CT Labor Department
PBCT
CT gained jobs in these sectors YOYCT gained jobs in these sectors YOY
200
200
200
200
400
500
600
800
2,100
2,800
5,400
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
Food Stores
Restaurants
Banking
Other Fin
Educational Services
Other Retail Trade
Construction & Mining
Auto Dealers & Gas Stations
Health Services
Other Services
State & Local Government
Change in CT Non-Farm Employment Mar. 2002 vs. Mar. 2001 ( Not SA)
Source: CT Labor Department
PBCT
CT unemployment rate lower than US rateCT unemployment rate lower than US rate
Source: CT Labor Department
Unemployment Rate CT vs. US
Unemployment Rate CT Unemployment Rate US
2
4
6
8
10
89 90 91 92 93 94 95 96 97 98 99 00 01 02
% of labor force (SA)
PBCT
CT Initial unemployment claims may have peaked?CT Initial unemployment claims may have peaked?
Source: CT Labor Department
CT Average Weekly Initial Unemplyment Claims
Transformation: Level Source: Ct Dept. of Labor, U, User
3000.00
4000.00
5000.00
6000.00
7000.00
8000.00
9000.00
90 91 92 93 94 95 96 97 98 99 00 01 02
PBCT
All LMAs have unemployment rates below 5.5% All LMAs have unemployment rates below 5.5% CT Unemployment Rates % by Labor Market Area (NSA. Mar. 2002)
2.7
2.9
3.1
3.1
3.4
3.7
3.8
4.3
4.6
5.3
0.0 1.0 2.0 3.0 4.0 5.0 6.0
Lower River
Stamford
Danbury
New London
New Haven
Torrington
Hartford
Danielson
Bridgeport
Waterbury
Source: CT Labor Dept.
PBCT
Housing permits up in most areas YTDHousing permits up in most areas YTD
Source: CT DECD
% Change in CT New Housing Permits Authorized YTD Jan. - Mar. 2002 vs. 2001 by LMA
-83.3%
14.3%
15.4%
22.6%
25.7%
28.4%
31.9%
54.8%
136.4%
-5.7%
30.5%
-150.0% -100.0% -50.0% 0.0% 50.0% 100.0% 150.0% 200.0%
Stamford
Lower River
Danielson
Bridgeport
New Haven
Hartford
Danbury
New London
Waterbury
Torrington
Connecticut
PBCT
Housing not overbuild like the mid-1980sHousing not overbuild like the mid-1980s
Source:CT DECD, New England Economic Project
Total housing permits authorized in CT in units
16,9
27 19,3
92
26,2
46
30,1
63
27,4
15
19,5
47
11,9
70
7,58
0
7,48
0
8,01
0
9,25
0
9,46
0
8,55
0
8,53
7
9,31
1 11,8
63
10,6
37
9,37
6
9,25
4
8,31
9
8,99
9
8,90
2
9,11
3
0.0
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
30,000.0
35,000.0
2002-2005 is forecast
PBCT
Auto registrations down 12.4% YTD Auto registrations down 12.4% YTD
Source: CT Labor Department
Connecticut New Auto Registrations Processed YTD - (Jan. - Mar.)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,0001
98
0
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
PBCT
Tax revenues are down 5.9% this year (FY 01-02)Tax revenues are down 5.9% this year (FY 01-02)
Source: State of CT Dept. of Revenue Services
Year-to-Date % change in CT Tax Revenues ( FY 01-02 vs. FY 00-01 July - Mar.)
-4.9% -3.4%
2.5% 1.4%
-31.9%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
Income Sales & Use Corp. Business Real Estate Conv. Motor Fuel Tax
PBCT
CT projects deficits after 10 years of surplusesCT projects deficits after 10 years of surpluses
Source: CBIA, CT OPM
General Fund surplus or deficit from operations - fiscal years - $millions
-105-27
-817
56 61
250 263
562663
497613
-351
-633
114113
-261
-1,000
-800
-600
-400
-200
0
200
400
600
800
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
2002-03 are estimated
PBCT
Summary
• Recession over - mild recovery underway
• CT economy - not a repeat of the early 1990’s
• Out-perform US - unemployment & income
• Under-perform US - population & job growth
• Pros: Wealth - productivity - tourism - bio-tech• Cons: High costs - manufacturing - energy - Wall Street -
State fiscal condition
PBCT
For more information...For more information...
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