In 2013, economic growth in Connecticut lagged behind already tepid economic growth across the country. According to the Bureau of Economic Analysis, the national economy expanded by 1.8 percent, while the Nutmeg State’s economy grew by a measly 0.9 percent.
But those days of trailing the rest of the country may soon be over, a report from the University of Connecticut’s Center of Economic Analysis suggests. The report predicts an unprecedented 8.1 percent growth in the state for the rest of 2015.
Should the economy grow at that rate, it would stand head and shoulders above the roughly 3 percent expected for the country at large. However, the center’s report does not expect the exceptional growth to last — in 2016, it says, the state’s economy will grow at a far more modest 3.2 percent.
According to Peter Gunther, a senior research fellow at CCEA and lead author of the study, biotechnology is the driving force behind the rapid increase in the state’s GDP.
“Biotech companies are by far the most up-and-coming industry in Connecticut,” Gunther said. “Many of these companies are doing their initial hiring in Connecticut, which gives local residents and college graduates a chance to be at the forefront of what the companies are doing.”
Other than biotech, the study cites low international oil prices, as well as the presence of many investment companies and manufacturers in Connecticut, as reasons for the anticipated strong growth in the state’s economy.
Although Gunther said he is confident Connecticut will experience significant growth this year, he — along with other experts in economics — said the projections may overestimate the true growth rate.
“The models we use do have room for error, so the numbers may point to a slight upward bias, but the state can realistically reach up to 6 percent growth if the current trends continue,” he said.
Other experts expressed doubts concerning the study and its findings.
Peter Gioia, an economist and vice president of the Connecticut Business and Industry Association, said he is skeptical of the study’s prediction.
“Frankly, I think they need to review their work. The models must be flawed, because it is completely unrealistic to reach this level of growth,” he said.
Gioia said he sees the state achieving growth of 3.5 to four percent. That growth, however, is entirely dependent on whether Gov. Dannel Malloy’s newest tax reforms pass through the state legislature.
Malloy released a newly revised state budget last Wednesday that proposed collecting higher taxes from businesses and hospitals and trimming the sales tax. If Malloy’s plan passes, it will have a negative effect on the state’s growth rate because new businesses will be deterred from operating in Connecticut, Gioia said.
Connecticut’s growth rate in 2014 was 2.6 percent, according to a report released by the Bureau of Economic Analysis.