cteconomy.uconn.edu top ten economic myths myth #10 recovery? what recovery?
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cteconomy.uconn.edu
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Top Ten Economic Myths
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Myth #10Recovery? What Recovery?
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CONNECTICUT’S RECOVERY IS UNDER WAYCh
ange
in Jo
bs in
Tho
usan
ds
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-80
-60
-40
-20
0
20
40
25
-12-16
-21
5
13
19 17
1
-73
-18
1714
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Myth #9Yes, but this recovery’s sub-par.
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-4% -2% 0% 2% 4% 6% 8%
-6%
-4%
-2%
0%
2%
4%
6%
JOB GROWTH HAS BEEN BETTER THAN EXPECTED
20112012
U.S. GDP Growth
CT Job Growth
1969-2012
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Myth #8The state hasn’t added jobs, on net, in 20
years.
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WITH ALL THE JOBS COUNTED THERE’S A LOT MORE WORK NOW THAN BEFORE
NOTE: Adjusted for population, CT was 10th in U.S. in employment growth 1994-2008
1990 1995 2000 2005 20101500000
1600000
1700000
1800000
1900000
2000000
2100000
2200000
2300000
Wage and Salary Employment
Total Employment
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Myth #7High labor costs are holding Connecticut back.
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$40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 $110,000 $80,000
$90,000
$100,000
$110,000
$120,000
$130,000
$140,000
$150,000
$160,000
OUTPUT PER WORKER FAR EXCEEDS COMPENSATIONAn
nual
Wor
ker O
utpu
t
Annual Worker Compensation (Salary + Benefits)
In 2011, CT #5 in Output less Compensation (After DE, AK, WY, LA
CT
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Myth #6Housing costs are out of line.
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$0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
Hartford
Stamford
New Haven
New LondonNew York
HOME PRICES TRACK WITH INCOME20
10 M
edia
n H
ome
Pric
e
2010 Median Family Income
Note: Bridgeport-Stamford 21% above predicted; NYC 67% above predicted
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Myth #5We’re a high-tax state.
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South Dak
ota
Tenness
ee
Missouri
Connecticu
t
Virginia
Illinois
Oklahoma
Wash
ington
Arkansas
Alabam
a
Florid
a
Distric
t of C
olumbia
Colorado
Nebras
ka
Louisia
naUtah
Oregon
Wisc
onsin
Californ
ia
New M
exico
Mississ
ippi
Vermont
West
Virginia
North Dak
ota
New Yo
rkAlas
ka0%
5%
10%
15%
20%
25%
30%
35%
40%
WE’RE 45TH IN OWN-REVENUE* AS A SHARE OF INCOME
* Includes Property, Sales, Individual and Corporate Income Taxes and user-charges for commodities and services (e.g. tuition, fees, tolls, etc.)
Own-revenue as a % of Income, 2010
Connecticut
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Myth #4The rich don’t pay their fair share.
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MILLIONAIRES’ TAX SHARE EXCEEDS INCOME SHARE
2004 2005 2006 2007 2008 2009 2010 20110%
5%
10%
15%
20%
25%
30%
35%
40%
CT AGI Taxes
NOTE: In 2011, millionaires represented 0.6% of Connecticut filers.
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Myth #3Income inequality is rampant.
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Wyo
mingUtah
Vermont
South Dak
ota
Montana
Wisc
onsin
Kansas
North Dak
ota
Indiana
Nebras
ka
Nevad
a Ohio
Arizona
Missouri
Pennsyl
vania
South Caro
lina
Arkansas
Kentucky
North Caro
lina
Alabam
a
Tenness
ee
Massach
usetts
Californ
ia
New M
exico
Connecticu
t0.4
0.42
0.44
0.46
0.48
0.5
0.52
STATE’S INCOME INEQUALITY IS SECOND AMONG FIFTY
2011 Gini Coefficient: 1.0 = perfect inequality 0.0 = perfect equality CT
New York
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< $25K > $200K0%
5%
10%
15%
20%
25%23%
4%
18%
9%
Avg StateConnecticut
FEWER OF US ARE POOR, MORE ARE RICHPe
rcen
t of H
ouse
hold
s, 2
011
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Myth #2Connecticut is plagued by a brain drain.
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Massach
usetts
Marylan
d
New Je
rsey
Vermont
New Yo
rk
Wash
ington
Rhode Isla
nd
Kansas
Hawaii
Montana
Nebras
kaAlas
ka
Pennsyl
vania
North Dak
otaTe
xas
Wisc
onsin
Missouri
Michiga
nIdah
o
South Caro
lina
Oklahoma
Indiana
Alabam
a
Louisia
na
Mississ
ippi
West
Virginia
0
5
10
15
20
25
30
35
40
45
WE’RE 4th IN COLLEGE-EDUCATED ADULTS
Percent of Population 25+ with bachelor’s or higher, 2011
Connecticut
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0 to
4
5 to
9
10 to
14
15 to
19
20 to
24
25 to
29
30 to
34
35 to
39
40 to
44
45 to
49
50 to
54
55 to
59
60 to
64
65 to
69
70 to
74
75 to
79
80 to
84
85+
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
AND THERE IS NO MASS EXODUS OF YOUNG PEOPLE(BUT AN AGING POPULATION POSES CHALLENGES)
1989 Profile
1989 Profile Advanced 20 Years
2009 Profile
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Myth #1We owe our success to Fairfield County.
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Connecticu
t
New Jerse
y
Marylan
d
North Dak
ota
New Hampsh
ire
Minnesota
Colorado
Rhode Islan
d
Californ
ia
Nebraska
Vermont
IowaTe
xas
Wisc
onsinMain
eOhio
Orego
n
Tennesse
e
North Caro
lina
Georgia
Arizona
New Mexic
o
Arkansas
West
Virginia
Idaho
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
#1 IN PER CAPITA INCOME WITH FAIRFIELD COUNTY
2011 Per Capita Income
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Massach
usetts
New York
Marylan
d
North Dak
ota
New Hampsh
ire
Minnesota
Colorado
Rhode Islan
d
Californ
ia
Nebraska
Vermont
IowaTe
xas
Wisc
onsinMain
eOhio
Orego
n
Tennesse
e
North Caro
lina
Georgia
Arizona
New Mexic
o
Arkansas
West
Virginia
Idaho
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
#4 IN PER CAPITA INCOME WITHOUT FAIRFIELD COUNTY
2011 Per Capita Income
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Beyond the Myths(Where to From Here?)
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GIVEN THE RANGE OF ECONOMISTS’ FORECASTS FOR U.S. GDP
2013 20140
0.5
1
1.5
2
2.5
3
3.5
1.6
2.1
2.8
3.2
LowHigh
Source: The Economist April 20th – 26th 2013
Annu
al F
orec
aste
d G
DP
Gro
wth
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2011 2012 2013 20140
5
10
15
20
25
LowHigh
14
10
14
CONNECTICUT COULD GAIN 20K-40K JOBS OVER THE NEXT TWO YEARS
19
22
17
14
Thou
sand
s
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STILL LEAVING CT’S JOB TOTAL 20-40K BELOW 2008 PEAK
2008 2009 2010 2011 2012 2013 20141560
1580
1600
1620
1640
1660
1680
1700
LowHigh
Thou
sand
s
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HOME SALES ARE PICKING UP
2000 2002 2004 2006 2008 2010 20120
1000
2000
3000
4000
5000
6000
7000
2000-2013 Average
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AS ARE PERMITS; PARTICULARLY MULTIFAMILY
2004 2006 2008 2010 20120
100
200
300
400
500
600
700
800
900
Single Family Permits
Multi-Family Permits
56
315
119
213
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BUT PRICES ARE STILL STRUGGLING TO RECOVER
2006 2008 2010 2012$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
$600,000
$650,000
High Value Tier
Mid Value Tier
Low Value Tier
Across Tier, Prices are Down Nearly 30%
Source: CREUES UConn School of Business
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AND THE SEQUESTER THREATENS TO REVERSE ANY PROGRESS IN JOBS IN 2013
-50,000
-40,000
-30,000
-20,000
-10,000
0
10,000
20,000
30,000
“Best Case” CT Job Growth
CT-Specfic Sequester-Related
Job Losses*
1.2% of U.S.Sequester-Related
Job Losses*
*CRS/Chumera Economics Estimates of direct, indirect and induced job losses
Chan
ge in
Jobs
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TO RECAP
Conventional Wisdom Doesn’t Always Stand
up to the Evidence
Connecticut Remains an Economic Leader and it is
Recovering, But Slowly
A Housing Resurgence Could Give the Economy
a Much-needed Boost
But Fiscal Austerity Could Still Derail the
Recovery
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cteconomy.uconn.edu