With federal benefits expiring and businesses fearing another pandemic shutdown, more than 840,000 Connecticut residents anticipate a dreary December — during which someone in their household will lose income, according to new data from the U.S. Census.
The latest Household Pulse Survey — a Census initiative in conjunction with the Centers for Disease Control and Prevention — shows abysmal consumer confidence, experts said, that could deteriorate Connecticut’s already-fragile economy quickly in the new year.
“What it says is ‘We aren’t going to spend anything if we can possibly avoid it,” said University of Connecticut economist Fred V. Carstensen. “We’re only going to pay for absolute necessities.”
The survey polled workers and the unemployed nationally from Nov. 11 to Nov. 23 about their expectations for the coming month, finding 76 million nationally, and 843,000 here, believe they or someone else contributing to their household will lose income soon. The Connecticut figure represents roughly one in three working age adults or teens.
Whether that many residents ultimately lose jobless benefits, face pay cuts or layoffs, watch seasonal work expire or otherwise fall back fiscally isn’t as important — right now — as what they think, said economist Don Klepper-Smith from DataCore Partners.
Klepper-Smith, who was chief economic adviser in the late 2000s to Gov. M. Jodi Rell, said the real threat is fearful and excessive belt-tightening that could cripple businesses already hurting since the pandemic began in March.
“What we have here is the perfect storm evolving,” he said, adding that the stock market’s robust performance since the summer isn’t enough to offset vanishing consumer confidence. “There is Main Street and there is Wall Street. Wall Street is pointing up, and Main Street is pointing down.”
Part of that “perfect storm” involves an array of federal extensions and enhancements to the base of 26 weeks of unemployment available to most jobless in Connecticut.
Some extensions already have expired, and two more — one that expanded benefits to include freelancers and a second that lengthened the duration of federal assistance — go away on Dec. 26.
And with the pandemic entering its 10th month in December, more Connecticut residents exhaust their state benefits each week.
But Carstensen, who heads the Connecticut Center for Economic Analysis, a UConn think-tank, said expiring federal aid is just the tip of the iceberg.
Even if President-elect Joe Biden, the new Congress and the Federal Reserve take steps in January to expand a stimulus, that might not be enough to convince frightened consumers to part with their resources.
“The Fed can flood the economy with money, but the Fed has no capacity to buy goods and services,” Carstensen said.
The Center for Economic Analysis warned in a late October forecast that Connecticut — already headed for trouble before the coronavirus due to inadequate investments in technology and transportation — likely would struggle for a decade or longer to undo the economic damage created by the pandemic.
And since March, workers and the unemployed read daily warnings and speculation from state officials, business leaders and others about the impending closure of one economic sector or another.
The Connecticut Restaurant Association, which launched its new #SaveCTRestaurants campaign last week, hammered its point home by noting that 600 restaurants already have closed here, and association executive director Scott Dolch added that “without additional support, many more are likely to shutter in the weeks and months ahead.”
Chris DiPentima, president and CEO of the Connecticut Business and Industry Association, said the best way to stop businesses from furloughing workers and trimming pay is for state officials not to wait for Washington alone to solve the problem.
“I don’t think there’s a silver bullet,” he said, adding that the association is asking Gov. Ned Lamont and the legislature to waive sales tax on business expenses on personal protective equipment and on worker re-training services.
Lamont did announce last Friday that he would increase state unemployment benefits temporarily for about 38,000 jobless residents who lost low-paying jobs. This, in turn, would enable them to qualify retroactively for $55 million in temporary federal aid — about $1,800 per person.
Patrick Flaherty, an economist with the state Department of Labor, cautioned against placing too much weight on the negative perceptions in the latest Household Pulse Survey.
Flaherty, who also is acting director of the department’s Office of Research, said many of those surveyed could be teens or adults who routinely pick up part-time work or a second job during the holiday season each year. It’s always done with the expectation that it ends around late December — even when there is no pandemic, he said.
But three-quarters of those anticipating income loss in Connecticut, more than 643,000 individuals were between the ages of 25 and 64, key demographics in the state’s workforce.
And the latest national jobs report showed not all hiring trends were holding up. And while temporary posts related to e-commerce were on the rise, those tied to traditional retail were down.
But Carstensen said the fundamental driver of the economy remains consumer demand.
Connecticut still has about 190,000 unemployed collecting jobless benefits each week. And after nearly a year of furloughs, layoffs and missed rent, mortgage or utility payments, it’s understandable that many believe the economic sky is falling.
“It’s a very, very scary environment,” he said.