State Economic News, Expectations Reflect Continuing Challenges

Connecticut’s labor force was showing signs of strengthening approaching mid-2025, hitting an all-time high of 1,960,200 in May.  But in the six months since, 15,700 people (-0.8%) left the labor force, which is just 0.2% above pre-pandemic levels, as of the end of November, according to a recent report by the Connecticut Business & Industry Association (CBIA), utilizing data from the State Department of Labor.

At 3.9%, Massachusetts has seen the region’s strongest post-pandemic labor force growth, followed by Rhode Island (3%), Maine (1.2%), Connecticut, New Hampshire (0.1%), and Vermont (-0.2%).

“These trends put an even sharper focus on the need to address affordability and workforce development in Connecticut,” said CBIA president Chris DiPentima.

“The 2026 legislative session begins in one month. Making Connecticut a more affordable place to live and do business must be a top priority for our policymakers—addressing the soaring costs of healthcare, childcare, and energy. And it’s critical that we find ways to build workforce training programs and career pathway pipelines to connect residents with meaningful career opportunities.”

Connecticut added just 1,800 jobs (0.1%) in the 12 months through November, with private sector employment declining by 500 (-0.03%).  The state’s overall job growth ranks 37th best in the country and trails the national rate by half a percentage point.

“With 73,000 openings as of October in Connecticut, it’s clear the jobs are there,” DiPentima noted. “Employers continue to do their part to fill those positions—average weekly earnings are up 5.4% from November 2024, outpacing inflation.”

In its annual economic forecast survey, published this week, Hartford Business Journal said the state’s business leaders responding to the survey were “noticeably less optimistic about Connecticut’s economy in 2026 than they were a year earlier.”

The survey found that “29.4% of respondents said Connecticut’s economy will improve slightly or significantly this year, down sharply from 51.2% who expected improvement in 2025.”  Additionally, “the share of respondents expecting the economy to decline rose to 35.9%, compared with about 22% a year earlier.”

The survey included the responses of 261 business leaders.  Among the key takeaways, looking ahead at economic conditions and decisions likely in the current calendar year:

• 47% view the economy as in worse condition today than a year ago

• 65% anticipate the economy will remain the same or decline slightly in 2026

• 45% of employers anticipate having employees work in the office 5 days a week

• The biggest impediment to business growth in Connecticut is seen as taxes (30%), followed by workforce shortage (17%), regulatory process (15%) and inflation (13%)

• 47% indicate that it is very difficult to find qualified workers

• 48% expect to raise wages to attract employees

• 56% expect inflation to increase in 2026

• 91% anticipate that health care costs will increase this year, including 12% who believe the increase will exceed 20%