For the most part, panelists at the Norwalk Chamber of Commerce’s recent annual Economic Outlook and Development Review came to the same conclusion that most observers of the U.S. economy have: It’s pretty hard to tell what might happen.
Given the uncertainties over how President-elect Donald Trump and his cabinet will deal with financial issues here and abroad, two of the panel’s three speakers repeatedly said that their opinions and advice were essentially guesswork.
Lucjan Orlowski, economics professor at Sacred Heart University, instead provided an overview of what he considered the biggest risks facing global economies and financial markets. Those included longevity, as seen in the increasing life expectancy of pensioners, which will put an increasing strain on national economies.
“In Japan, for example, there are now three actively working people for every one retired,” Orlowski said. “Twenty years ago that was six to one.”
The professor also looked at global gross domestic product figures, which he said should be of concern. While the U.S. recorded a roughly 3.2 percent GDP growth in the third quarter of 2016 and will likely show a growth of about 2 percent for the year, the United Kingdom recorded a third-quarter growth of 0.6 percent, while the European zone grew by 1.4 percent, China by 7.4 percent and the Russian Federation by 0.6 percent.
Such imbalance ultimately bodes ill for the global economy, Orlowski said, noting that the forthcoming exit of the U.K. from the European Union will likely lead to a recession. The Russian Federation is already in a recession due to its economy’s lack of diversification and its political climate, he said. And China’s impressive growth is less so when compared to the 12 percent growth it was experiencing a few years ago. The bubble created by that country’s huge private debt – which is two times that of its GDP – is due to burst, he added.
Where the U.S. could be headed is hard to predict, Orlowski said. He did, however, note that Trump’s proposed corporate tax cuts – from the current 35 percent to a “destination-based cash-flow tax” at a 20 percent rate for corporations and 25 percent for unincorporated businesses — could spur further growth, and bring the nation more in line with competing countries like Germany, whose corporate tax rate is 29.72 percent, and the U.K., where it stands at 20 percent but is due to fall to 17 percent by 2020.
Peter Gioia, vice president and economist for the Connecticut Business & Industry Association, provided a mostly sunnier view, at least for the state. “The Connecticut economy has great economic potential,” he said. “We’re certainly not hitting it, but the potential is there.”
The state’s business diversity – including manufacturing, bioscience and financial services – combined with an education system and workforce that are “the best in the United States” make Connecticut attractive to businesses, at least on paper, he said. In addition, “Banks have money to lend and want to lend.”
The problem, Gioia added, was with the state’s lawmakers. “We need to spend within our means and establish long-term predictability,” he said. “We’ve been saying that forever, so it’s really refreshing to see the governor now reading from that script.”
Saying that Connecticut’s fiscal condition has been “a 20-year problem,” Gioia urged the roughly 130 people in attendance at the DoubleTree Hotel to contact legislators at all levels. “We don’t need any more budgets that are balanced for 10 minutes,” he said.
Gioia said the perception of Connecticut as an “anti-business state” also needs to be addressed. “That’s a perception that is easy to change,” he said, but without long-term predictability, companies are reluctant to come here “when they don’t know what their tax burden is going to be five, 10, 15 years from now.”
He said he also sees potential gains over the next five years tied to Brexit, which he predicted will see an influx of London-based multinationals to New York, with a positive spillover effect for Fairfield County – but only if lawmakers can get their collective act together.
“This is the most critical legislative session we’ve had in my lifetime,” Gioia said.
Norwalk Director of Economic Development Elizabeth Stocker recapped the city’s various development projects. Among those are the SoNo Collection megamall, which she said would provide about 1,900 construction jobs over 30 months and 2,000 permanent jobs once it opens in 2019.