The Fairfield Chamber of Commerce”™s 2021 Economic Outlook presentation broke with tradition as the Covid-19 pandemic forced the yearly event to be switched from a breakfast gathering of business professionals and legislators into a virtual showcase.
But in keeping with tradition, John Traynor, executive vice president and chief investment officer at People”™s United Bank, returned to provide his annual forecast for the economic year ahead.
For Traynor, the arrival of Joe Biden in the White House will create an economic and political climate that will be anything but sleepy.
“We really believe that the policies that he”™s implementing, the policies that he plans to implement and the changes that we”™ve seen down in Washington are going to have a tremendous impact on the economy going forward,” Traynor said about the new president.
“I don”™t think anybody on this call would disagree with me, there”™ll be pretty heated debates on taxes and regulation. But we do believe the economy this year and into next year is going to rebound and rebound very strongly. So, we”™re very positive on the environment going forward.”
Traynor highlighted that the pandemic continues to frame the economic picture. He observed the pandemic-induced recession is “more critical to the service economy than it is to the manufacturing side of the economy,” but he stressed that an across-the-board recovery can only be fueled if lingering reluctance over the efficacy of the vaccine is minimized and people accept the vaccine as the best tool for speeding the pandemic”™s demise.
Traynor also cited the need to increase consumer confidence and business confidence. While observing that “consumers need to be more confident to go out and patronize” businesses, he also insisted that businesses need to display confidence by increasing capital spending.
“If you”™re a small business and your confidence isn”™t high, you”™re not going to go out and expand your business,” he said. “We need this to increase very dramatically.”
Traynor floated the potential for a new wave of business formations arising from the recession. But for those dependent on being employed rather than self-employed, he acknowledged Connecticut”™s unemployment levels have ticked upward, further complicating a swift recovery.
And while Connecticut housing prices remain high, Traynor noticed Fairfield County is attracting a new wave of younger homeowners from outside of the region.
“My wife and I live lived here in Fairfield for years,” he said. “And we”™re now the old man and old woman on the street ”” every house around us are all now filled with young families, most of them are moving up from New York, and they all seem to have two or three kids who are three, four or five years old. And we”™re seeing that across the board, so we believe we”™re going to see this trend continue.”
Traynor also predicted a post-pandemic environment that will not see the return to daily commuting from the suburbs to Manhattan, but will instead spur new office leasing locally.
“When we finally get to a point where we can start going back to the office, I doubt that all of us are going to be in the office five days a week,” he said. “You”™ll probably have a lot of people that are commuting into New York saying, ”˜I don”™t need to be in my office downtown or on Park Avenue five days a week. Let me set up an office here in Fairfield or let me work from home.
“You”™ve probably got a lot of people in New York thinking, ”˜We can move out to the suburbs and have a better quality of life,”™” he said. “Even though we”™re seeing a quick burst here, we believe there”™s a trend in real estate that”™s going to continue and Connecticut, especially Fairfield County, is really going to benefit from that.”
One wild card that could reshuffle the economic deck involves taxes, with Traynor recalling how U.S. companies that reincorporated overseas began to shift their operations back to the U.S. when the Trump administration successfully pushed to lower taxes. But with the Biden administration advocating higher corporate taxes, that scenario could change.
“A concern that we have is that we believe tax rates are going to go up,” he said. “But if they go up too high, we could actually see these inversions start to increase again. I know the Biden administration is sensitive to this ”” Joe Biden is actually talking about it.”
