While most Connecticut businesses are optimistic the nation’s economy will grow over the next year, a new survey has found many have broad anxiety about the state’s economic future.
The Connecticut Business and Industry Association’s 2018 Survey of Connecticut Businesses also found business leaders disapprove of the legislature’s handling of the economy and want the next governor and General Assembly to focus on cutting spending and reforming state employee retirement benefits.
“Unfortunately, business leaders feel not enough lawmakers take the state’s challenges seriously,” said CBIA president and CEO Joe Brennan. “They want change and an aggressive, sustained focus on driving economic growth and job creation.”
Th survey, prepared for CBIA by Marcum LLP, a public accounting and business advisory firm, was sent in June an July to approximately 6,400 business executives. A total of 313 executives responded, giving the survey a 5.6 percent margin of error.
Connecticut’s economic future
Business leaders who participated were lukewarm about Connecticut’s economic future.
The survey found 18 percent who believe the state’s economy will grow over the next 12 months, compared with 52 percent who believe it will remain static, and 30 percent who say it will contract.
By comparison, 85 percent said they believe the U.S. economy will grow over the next year, with 11 percent saying it will remain constant and 4 percent predicting it will slip.
When asked what factors are hampering business growth:
- 64 percent agreed business costs driven by government mandates are a factor.
- 56 percent agreed on the unpredictability of state legislative decision-making.
- 49 percent cited the state’s high cost of living.
- 48 percent cited high business taxes.
- And 39 percent agreed there aren’t sufficient skilled workers available.
Despite their gloomy assessment of the state’s economy, businesses say they have been making money.
More than two-thirds of those surveyed — 69 percent — reported profits in 2017, three percentage points higher than those who did so in last year’s survey, while 18 percent reported losses and 13 percent broke even.
The survey also found 73 percent forecast a profitable 2018, with 19 percent expecting to break even and 8 percent predicting losses.
Why are businesses so gloomy about the upcoming year if so many were profitable in 2019?
“I think the fact that Connecticut has lagged behind the nation, the huge fixed costs the state (government) has, and the struggle to find a skilled workforce has really tempered their enthusiasm,” Brennan said.
That lack of available, skilled workers has been cited in several CBIA surveys. This time just 39 percent of business executives who responded said their workforces are growing, while 51 percent are holding steady and 10 percent are declining.
Other related results include:
- 43 percent of all companies reported sales growth with 44 percent holding steady;
- 56 percent of manufacturers report sales growth, with just 10 percent reporting declines;
- 48 percent of companies introduced a new product or service over the last year;
- But only 40 percent say they will introduce a new product or service in the next 12 months.
Proximity to customers, including many in Boston in New York, was cited by 45 percent of respondents as Connecticut’s greatest business advantage. Another 41 percent selected the state’s quality of life.
2018 state elections are key
With Gov. Dannel P. Malloy not seeking re-election, with the state Senate deadlocked 18-18, and with Democrats holding a slim edge over Republicans in the House, the survey focused closely on the 2018 state elections.
Just more than 70 percent of survey respondents said Connecticut’s struggling economy would have a greater impact on their vote than in previous elections.
When asked what the priority of the next governor and legislature should be, 37 percent selected “cut spending/reform state employee retirement system.”
Other results include; economy/business climate, 30 percent; budget/fiscal stability, 29 percent; lower taxes, 18 percent; transportation, 7 percent; education, 2 percent; and other, 1 percent.
“The prescription CBIA is pursuing would make Connecticut even more unfriendly to all workers by slashing vital services, choking off investment and further widening the wage and wealth gap,” said Connecticut AFL-CIO President Lori J. Pelletier. “State workers have already made billions of dollars’ worth of economic concessions – saving taxpayers $24 billion over 20 years. Yet the business lobby completely ignores the real sacrifices that public service workers have made to reduce the unfunded liability and help close the deficit. And apparently CBIA has forgotten that the underfunding (of the pension system) was not the fault of our state workers or that the system is now being funded properly and has modest benefits. True to form, CBIA is pushing another anti-worker agenda that will only serve to benefit corporate CEOs.”
The survey also found 81 percent of respondents disapprove — strongly or somewhat — with the legislature’s handling of the economy and job creation. Another 14 percent said they were neutral, with 5 percent approving of current lawmakers’ performance on this matter.
Respondents overwhelmingly — at 97 percent — agreed that state policymakers “focus too heavily on workplace mandates rather than prioritizing economic development and job creation,” while 2 percent were unsure and 1 percent disagreed.