Connecticut’s ranking in the Citizens Business Conditions Index, which measures lending and business applications for all sorts of industries, dropped slightly between the third and fourth quarter of last year.
“The Citizens Business Conditions Index for Connecticut dipped quarter over quarter, but it remains slightly above 50, which signals that the state economy is still in expansionary territory,” Lisa Maass, president of Citizens in Connecticut, said. “We feel that the year is off to a positive start in many ways and we work with our clients every day to help them meet the challenges they face, such as housing and health care costs.”
The second consecutive quarterly reading above 50 indicates that the economy exited 2023 with momentum as signs of moderating inflation support optimism for a soft landing.
The Federal Reserve Open Market Committee is expected to announce it will maintain the central bank rate at 5.25 to 5.5% today.
While Citizen’s says applications for new businesses were slightly softer during the period, solid employment trends, particularly in local government and health care, contributed to improving economic conditions in the fourth quarter both nationally and in Connecticut.
Citizens’ proprietary data on client revenue also remained strong across most industries. Health care and consumer services were once again among the top sectors, while the basic materials and energy sectors faced headwinds during the period.
“The U.S. economy is entering 2024 on solid footing as the labor market has remained resilient and inflation has showed signs of normalizing,” Eric Merlis, managing director and co-head of global markets at Citizens, said. “Moving forward, all eyes will be on the Fed and the timing and pace of rate cuts in the year ahead.”
Economists are predicting several rate cuts this year, but the timing of them remains in question.
“The fourth quarter CBCI shows a business environment that continued to improve despite ongoing challenges in the macro environment during the period,” Merlis said. “Citizens’ middle market and mid-corporate clients have remained resilient and, as we head into 2024, the tailwinds continue to be stronger than the headwinds.”
As far as labor is concerned, Connecticut employers added 22,700 jobs in 2023, with most industry sectors posting significant gains for the year.
Employment grew 1.4% in 2023 — fourth best in the region and 32nd among all states — and reached full pandemic recovery in October before posting losses in November and December.
However, Connecticut still has more job openings, 75,000, than it has in weekly unemployment filers – 30,000.
“Connecticut’s labor force—those working and those actively looking for work—declined another 14,300 people last year and is down 37,900 people since Feb. 2020,” CBIA President and CEO Chris DiPentima said. “We must attract more people to the state and that means renewed focus on making Connecticut a more attractive and affordable place to live and work.”
DiPentima called the numbers “a frustrating end to what really was a promising year for job growth.”
“The job openings are here—we now have approximately 1.2 job openings for every unemployed person—what we need are the people to fill them,” DiPentima added.
Connecticut’s cost of living is still very high compared to other parts of the country. According to Zillow the median Connecticut home value is $377,247, up 10.3% over the past year and goes to pending in around 10 days.
