Editorial: State inches toward economic optimism

Susan Bysiewicz and Ned Lamont raise their arms after addressing the crowd gathered for a unity rally at Wooster Square Park in New Haven, Conn., on Thursday Aug. 30, 2018. During the rally, Lamont spoke about his vision for creating jobs, growing the economy and improving the business climate in Connecticut.

The Connecticut labor market was due for some good news, and it received some Thursday with word that the state gained some 2,800 jobs in August, according to the U.S. Bureau of Labor Statistics. Combined with a revised July total, which saw the state gain 1,600 jobs — rather than a small loss, as initially reported — it was a welcome change from the doldrums the state has often found itself in over the years since the Great Recession.

No one should make too much out of what could turn out to be a statistical blip. But the state will take positive economic news where it can get it, and Thursday’s report had more to offer.

For instance, the unemployment rate remains at 3.6 percent, and the state reported the size of the labor force grew in August for the first time in several months. This is important because the jobless rate is determined by how many people are actively seeking work. People who have been out of a job for so long that they have grown discouraged and stopped looking are not counted in the most commonly used unemployment figures, so the size of the labor force is critical.

Another piece of welcome news was growth in the government sector, which includes federal, state and local employment, including public higher education and Native American casino employment on tribal land. This has been the sector that has dragged the state’s post-recession numbers down. While Connecticut has regained all the private-sector jobs it lost after the financial crisis, the overall job numbers have lagged thanks to losses in the government sector. A recovery there is key to spurring lasting growth.

Connecticut, like any state, is at the mercy of economic trends far beyond the control of any governor or legislature, and today, the national picture of an economy that is enjoying its longest streak of uninterrupted growth in history is, if not dire, at least raising some concerns. Many economists expect a recession within the next year or two, and federal policymakers have started to take steps to spur growth and put off the next downturn.

This is where Connecticut is in a better position than month-to-month fluctuations in the labor market might indicate. Gov. Ned Lamont, following the lead of his predecessor, Dannel Malloy, has built along with legislators a strong rainy day fund in preparation for the next economic slowdown, and has resisted the temptation to blow that savings on short-term political gains.

The state’s reserve fund totals about 12 percent of annual operating expenses, far higher than it was at its previous high-water mark in the early 2000s, giving the state at least some breathing room when the next revenue drop strikes. This may not be easily visible to state voters, but could go a long way toward making the next recession much less painful than it could be.

The state saw some positive news on the job front this week, and much more is needed in that department. Even more important are its long-term plans for weathering the next storm.

Connecticut Media Group