State experts claim economy perking up

The economic view for Connecticut in 2007 is better now than it seemed in earlier predictions, but economists are still expecting slow growth overall.

"I suspect that -- housing will be somewhat more affordable. That's a good thing," said Stanley McMillen, managing economist for the state Department of Economic and Community Development, on Wednesday.

However, more affordable housing comes at the expense of construction jobs and consumer spending, which he said could decline when house values do.

McMillen outlined his expectations in the January edition of The Connecticut Economic Digest, a monthly publication by the Department of Economic and Community Development and the state Department of Labor.

Citing forecasts from the New England Economic Partnership for a 0.6 percent growth in nonagricultural jobs -- to 1.683 million in 2007 -- he said to expect lackluster growth in employment and median wages.

But, McMillen said, the state, like the nation, will benefit from low inflation and stable prices and interest rates. And the outlook for commercial construction appears better than that of residential.

"The tradespeople who build things -- it doesn't matter if it's residential or nonresidential construction," McMillen said.

A drop in home prices could help with another of Connecticut's economic troubles -- workers and companies find the state generally unaffordable and Connecticut is losing skilled workers to cheaper states.

Although cheaper housing isn't enough to bring people back to the state, it will help retain the workers already here, he said.

"That might forestall some of the exodus." Todd Martin, an economic adviser to People's Bank, and Peter M.

Gioia, a vice president and economist with the Connecticut Business & Industry Association, generally agreed with McMillen's outlook.

Martin said he expects the state will add between 10,000 and 12,000 jobs in 2007, for "relatively slow but continued growth." "So far, we've been seeing pretty decent, high-paying jobs" in the finance and insurance sectors, Martin said.

But Gioia said he wasn't sure he agreed with McMillen's prediction of a lower-skilled work force in the future, as people and companies move to less expensive states.

Connecticut's companies would have trouble finding the skilled workers they need in other states, Gioia said, so will train internally.

McMillen and Gioia agree, however, the state and businesses need to invest in infrastructure, such as education, transportation and housing.

"There's no quick fix. You have to have an investment mentality," McMillen said.

While the outlook is moderate, it's better than a year ago, Gioia said, when many people expected 2007 would bring a recession.

But the interest rate increases weren't as damaging to economic growth as expected and the housing market didn't collapse.

"There's a lot of things that are going right," Gioia said.