Boston Fed chief addresses state business leaders
Hartford — Sen. Norm Needleman, D-Essex, told a gathering of business leaders Monday that he is “tired of hearing that constant drumming that Connecticut is a disaster,” adding that the state loses customers when everyone is talking about the negative.
State Sen. Paul Formica, R-East Lyme, a longtime friend of Needleman’s, responded that “people are leaving the state not because we’re talking about things that are negative; it’s because things are negative.”
When Federal Reserve Bank of Boston President Eric Rosengren got up to speak, he said he would be the “the resident optimist,” citing the 50-year low nationwide for unemployment rates. He said when he talks to Connecticut business leaders, they tend to be more negative than what the economic data show.
Rosengren noted that while inflation has not reached the Fed’s target of 2% over the past decade, he expects the rate to start pulling up to 2% throughout 2020. It’s a balance in that he doesn’t want to see too much inflation, but Rosengren said he doesn’t expect the inflation rate to pick up too much, in part because labor unions aren’t as powerful as they were when inflation was high in the ‘70s.
Rosengren was the keynote speaker at the Connecticut Business & Industry Association’s annual Economic Summit + Outlook, held at the Hartford Marriott Downtown on Monday morning.
He followed a panel about the legislative perspective of small business growth, featuring Needleman and Formica along with Sen. Christine Cohen, D-Guilford, and Rep. Laura Devlin, R-Fairfield.
Rosengren said it doesn’t look like the ramifications both the Fed and businesses feared about trade issues manifested themselves. But he noted that while consumption, personal income and the stock market have been strong, business-based investment has been weaker, in part due to the uncertainty around trade.
Rosengren said his forecast for GDP growth is “relatively weak” because neither growth in productivity nor growth in population is particularly strong, and he noted for the latter that immigration restrictions are “restricting how quickly we would otherwise grow.”
The Fed reduced interest rates three times last year, and Rosengren doesn’t expect rates to move much this year, since it’s an election year, unless there’s strong evidence that doing so is an economic necessity.
In the panel before Rosengren’s talk, legislators talked about the legacy of underfunding the pension system, their issues with the Transfer Act, and their frustrations as legislators.
“It’s not a one-size-fits-all approach,” Cohen said. “Different regulations impact different sectors differently, so sometimes we really need to dig down into the nitty-gritty.”
Needleman said, “No party has a monopoly on good ideas, and no party has a monopoly on bad ideas.” Devlin voiced her frustration with instances where measures in the budget counteract business-friendly bills.
A panel after Rosengren’s address focused on health care and the Connecticut economy. Usha Pillai, a consultant and former Pfizer researcher, noted that focusing on “the traditional, blockbuster drug” is “no longer a viable option,” and that with increasing time and costs, pharmaceutical companies are outsourcing their risk by outsourcing research to startups.
ConnectiCare President Eric Galvin added that manufacturing capacity is shifting from low-cost, high-volume drugs to ones that are more specialized, and drugs are expensive because “we’re looking to the pharma industry to solve much more complex problems.”
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