HARTFORD, CT — Uncertainty and unpredictability in legislative decision-making is hurting economic growth in Connecticut, according to the latest Connecticut Business and Industry Association survey.
The survey conducted by Marcum found optimism about the national economy, but a lack of enthusiasm about Connecticut’s economy. Eighty-five percent of companies who responded believe the U.S. economy will grow in the next 12 months.
The same enthusiasm doesn’t exist for Connecticut.
Business leaders have a tepid outlook for the state’s economy in the next 12 months, with just 18 percent forecasting growth. Just over half predict the economy will remain static and 30 percent believe it will contract.
“Unfortunately, business leaders feel not enough lawmakers take the state’s challenges seriously,” CBIA president and CEO Joe Brennan, said. “They want change and an aggressive, sustained focus on driving economic growth and job creation.”
The full survey was released Friday at the Connecticut Economy conference in Hartford.
Three hundred and thirteen companies responded to the survey that was mailed out in mid-June through late July. The largest segment of responses or 34 percent came from manufacturing companies. The survey has a 5.6 percent margin of error.
The pessimism in Connecticut’s economy is not unfounded.
Last year, Connecticut’s economy shrank 0.2 percent—one of just three states with negative growth. The national economy expanded 2.1 percent, while the six New England states averaged 1.6 percent growth, led by Massachusetts at 2.6 percent. Connecticut’s economy has expanded only once in the last five years, growing 1.1 percent in 2015.
The lack of economic growth will have a big impact on Connecticut’s election, according to the survey.
All 187 seats in the General Assembly are on the ballot this November. Democrats currently control the state House of Representatives 80-71, while the 36-seat state Senate is evenly split between Democrats and Republicans.
Seventy-one percent of survey respondents said Connecticut’s struggling economy will have a greater impact on their vote for governor and the state House and Senate than in previous elections.
Not unlike the Sacred Heart University poll, the CBIA survey found a quarter or 24 percent said the economy will impact their voting decisions.
The survey also found 81 percent of business owners disapprove of the legislature’s handling of the economy and job creation, while 14 percent were neutral and just 5 percent approve.
Asked what the top priority should be for the state’s next governor and General Assembly, who will face a projected $2.1 billion budget deficit in fiscal 2020 and a $2.6 billion shortfall the following year. More than one-third cited government spending cuts, including reforming the state employee retirement system, as the top priority.
What are the primary factors inhibiting business growth?
Almost 64 percent of respondents cited business costs driven by state government mandates— other than taxes—as the top factor hampering growth.
Fifty-six percent blame the uncertainty and unpredictability of legislative decision-making, followed by the state’s high cost of living at 49 percent, heavy business tax burden 48 percent, and the shortage of skilled workers 39 percent.
“We’re fighting the same battles over and over,” said one respondent. Noted another: “The cost of doing business is too high.”
But most Connecticut companies are reporting a profit.
More than two-thirds of the companies surveyed reported profits in 2017, an increase of three percentage points over the previous year.
Eighteen percent reported losses, up marginally from 17 percent in 2016. The percentage of those breaking even fell four points to 13 percent.
Looking ahead, 73 percent forecast a profitable 2018, 19 percent expect to break even, and 8 percent predict losses.
“Connecticut companies continue to see growth, which is a positive, but at a rate that is lower than the national average, and significantly lower than some of our direct neighbors,” Marcum LLP office managing partner Michael Brooder said.
The survey found businesses are adapting and evolving to improve their competitiveness, expanding markets domestically and internationally, with many also shifting production out-of-state to escape Connecticut’s high costs.