Comptroller Natalie Braswell today, in her monthly financial and economic update, projected a Fiscal Year 2023 General Fund surplus of $494.2 million while noting the continuation of recent economic trends including high costs and a strong market for jobseekers.
“Despite the national and global economic unpredictability that has marked the pandemic recovery, Connecticut's budget has proven resilient,” said Braswell. “While it's still early in the fiscal year, we are on pace to record another surplus, building on recent successes in stabilizing state finances and guarding against future downturns in the economy.”
The national Gross Domestic Product (GDP) was up this quarter after two quarters of negative growth, a positive sign for America's economy. Consumer confidence was down slightly, however, due to fears of a possible recession and the prolonged effects of inflation.
Connecticut added 4,400 jobs in September and, like the country overall, has more job openings than jobseekers. This is resulting in a strong labor market for workers. The state has now recovered 89.2% of the jobs lost during the COVID-19 lockdown, nearly 92% in the private sector.
Elevated interest rates have compounded issues with housing costs. Low inventory and increased demand have been pushing prices upward for months. With rates climbing, applications for new mortgages are down 40% nationally, reaching the lowest level in 25 years.
Consumer spending has risen, and personal savings rates have declined, as people struggle with high costs due to inflation. Overall, consumer sentiment has been closely aligned with the cost of gasoline, which has been volatile and influenced by several factors including the ongoing war in Ukraine.
In a letter to Gov. Ned Lamont, Braswell noted that Connecticut's income tax withholding receipts have been strong but cautioned that it is still early in the fiscal year. The surplus projection grew by nearly $50 million this month due to increased federal aid and savings from a new retiree health contract negotiated by Braswell's office.
“Much of what happens in the global economy is out of our control here in Connecticut,” said Braswell. “It's our responsibility to be prepared for all possible outcomes. By filling the Rainy Day Fund and addressing long-term costs, the state can spare taxpayers from reliving the era of tax hikes, punishing service cuts and endless budgetary warfare in the Capitol that followed the Great Recession.”
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