Economist calls Danbury great, U.S. mediocre and Conn. terrible

By Scott Benjamin

DANBURY – Economist Donald Klepper-Smith says the metro Danbury area continues to outperform a Connecticut economy that has only regained 82 percent of the jobs lost during the Great Recession and over the last year has experienced negative growth in disposable income.

Metro Danbury – which consists of the Hat City, Brookfield, Bethel, Bridgewater, New Fairfield, New Milford, Newtown and Sherman – has regained 106 percent of the jobs lost in the recession and now has the lowest unemployment rate in Connecticut at 4.3 percent, well below the 6.6 percent figure in metro Waterbury, 30 minutes away.

“You should share what you’re doing with the rest of the state,” he said to about 100 people April 17 at the Ridgewood Country Club during the annual Greater Danbury Chamber of Commerce Economic Forecast Breakfast.

“I think the prime reason for the success of the area’s economy is that we have good municipal leaders that set the appropriate regulations and entice businesses to come here,” said state Rep. Steve Harding (R-107), an attendee, whose district includes all of Brookfield, the Stony Hill section of Bethel and a slice of northern Danbury.

“Obviously having the Danbury Fair Mall is a good starting point,” he said, noting that Danbury leads the state in sales tax revenue.

“But along Greenwood Avenue in Bethel you have some unique restaurants that attract people from outside the area, and in Brookfield you are on the cusp of a major economic expansion with the Town Center of Brookfield near the Four Corners about to come to fruition,” Harding explained.

Klepper-Smith of Data Core Partners in New Haven, who was chairman of former Gov. M. Jodi Rell’s (R-Brookfield) economic team and served on the team that advised former Gov. Lowell Weicker (ACP-Essex), has offered similar praise for metro Danbury and pessimism for Connecticut in his presentations in recent years at the event.

He said part of the reason that Connecticut has had the worst recovery among the six New England states is that the lack of job creation has contributed to a meager housing market. He said that on average a net of 428 people leave Connecticut each week.

Klepper-Smith, who is the economist for Farmington Bank and is frequently quoted by state media, is critical of Gov. Dannel Malloy’s (D-Stamford) First Five/Next Five program, which since 2011, the governor’s first year in office, has provided financial incentives to such corporate giants as Cigna, ESPN, Indeed, Cartus and Bridgewater Associates if they produced a large number of new positions over the coming years.

“It’s like feeding one of your kids and letting the others go hungry,” Klepper-Smith said. “We should be establishing policies that benefit the whole economy and not a select few.”

However, during his first year in office Malloy also established a Small Business Express program that has provided incentives for smaller companies. State Rep. Bob Godfrey (D-110) of Danbury has lauded that effort.

Klepper-Smith did not address the report issued last month by the Commission on Fiscal Stability and Economic Competitiveness, but told CTHearst recently that, “My sense is that if enacted, these recommendations would put Connecticut’s economy further in the hole in the long run.”

The commission’s recommendations included reducing the income tax, raising sales tax rates, imposing a payroll tax on businesses, giving the General Assembly more control over the state employees’ pension and health care benefits, building a college campus for technology and math and science in a major city, boosting the minimum wage to $15 an hour and establishing highway tolls to fund infrastructure improvements.

Harding said he supports giving more control to legislators over the fringe benefits for the employees from the collective bargaining units since it is the “biggest driver of state spending.”

However, he said he opposes adding tolls and raising the minimum wage since they would hurt job growth.

Regarding the national economy, Klepper-Smith said the tepid recovery since the summer of 2009 will likely continue. He said the economy will likely grow 2 to 2.5 percent in 2018 after a 2.3 percent boost in 2017 and 1.5 percent growth in 2016.

The economist said a recent NBC News/Wall Street Journal poll reported that about two-thirds of Americans are “satisfied” with the U.S. economy, which has added 18.5 million jobs since 2010

Klepper-Smith predicted that there is only “a 1 in 3 chance that there will be a recession in the next 12 to 18 months.”

He said the economy’s performance will largely be based on the President Donald Trump’s massive tax cut; the president’s imposition of steel and aluminum tariffs that appear to have initiated a trade war; and whether new Federal Reserve Board Chairman Jerome Powell will be more “hawkish” in raising interest rates to ward off higher inflation.

Klepper-Smith added, “With all of those things factored in, I think we’re still looking at subpar growth.”