Welcome to myristica

If you are receiving this, at some point we've connected, and you expressed interest should I ever launch a newsletter. July 6, 2024 marks my one year anniversary in public service, and the time felt right to start one.

So welcome to myristica, where I will be writing about the Connecticut economy, long term trends, my observations about our strengths and weaknesses, and ways we are investing to support our economy and our communities. I chose the name myristica as that is the tree that produces nutmeg. The idea behind the name and the logo is that the work we do today has real impact and implications for the Connecticut of our future.

This last year has been an incredible learning experience for me. I have spoken to hundreds of folks across the state - business leaders, community leaders, political leaders, and just those who care about our State and its prospects. I plan to use this space to collect data points that might be of interest, talk about our work and challenges, and just post general musings. The website at myristica.org will capture all; this newsletter will be curated and sent whenever there's enough for a quick weekend read.

This is purely a personal passion project. No state resources have or will be used in its production. All opinions are my own, and while I am careful to only share data from validated sources, no warranty is expressed or implied. All opinions and errors are my own.

My hope is this becomes a mechanism for us to engage more deeply. I'm excited for that potential, and to continue to work with, and learn from, all of you.

Let's get after it.

Dan
Commissioner & Chief Innovation Officer
State of CT
dok@ct.gov

On the Connecticut Economy..

In my prior life I spent a lot of time analyzing companies and their prospects, and I always found that if you really wanted to get a sense for trends, you need to zoom out.

So let's zoom out, and look at the Connecticut economy over the last 20 years. In doing so I looked at how our state compared to other states, other regions, and the US overall. And I also looked at composition of growth and decline by sector - ie what industries are contributing to our relative growth, which are detracting from it, and what the implications might be for our future.

When you do that, you see 3 distinct phases emerge:

• the years leading up to the Global Financial Crisis, so 2004 - 2007 (tl;dr: these were good years: 16th best performing state economy)
• the "lost decade", the 10 years post the GFC, so 2008 - 2018 (really bad years: 39th worst performing)
• and finally more recent trends, impacted deeply by the Pandemic, so 2019 - current
  • And here, I think it's really important to now zoom back in, and look at pre-pandemic versus post-pandemic trends
  • It's this latest phase - the one we are experiencing right now - that I think gets really interesting

In this analysis I am focused on real GDP growth, which I think is the ultimate key performance indicator. I believe the most direct path to societal progression is to ensure equitable access to a growing economic pie; that is the difference between an investment mindset and a spend mindset. And so I compare and rank CT real GDP growth to other states and regions over time. There are other important factors like job growth, consumer pricing and inflation, real wages, taxes and tax policy, energy prices, and many others. I plan to write about may of these in the future. For now, let's stay super focused on GDP.

The Analysis

In the lead up to the GFC, things were really good for the State of CT. We were one of the top performing state economies, and the 6th fastest state economy in 2004.

Then the Global Financial Crisis hit, and we really took it on the chin. One of our largest sectors is Finance and Insurance, which in 2007 had reached 15.3% of our GDP - so when that sector hurts we hurt. And in the 10 years that followed, our economy contracted on an inflation adjusted basis. You don't need an MBA to know that economies aren't supposed to get smaller over time, let alone over the course of a decade.

During that time, we were the 50th worse performing state economy in the US with a -0.3% 10 year CAGR. Good news: it's out of 51, as the BEA includes DC as its own entity for reporting. So we just edged out Wyoming (#51, with -1.2% CAGR) but did worse than Mississippi (-.1% CAGR), and we were the only 3 states to decline over that period. The other 48 states (don't fact check me - again this is out of 51) managed to grow.

Then - global pandemic. Which clearly none of us wanted, but what if - and bear with me for a minute here - what if the State of Connecticut uniquely benefited? What if the pandemic was the shock to the system our economy needed? Let's look at the trends.

In the 2 years prior to the pandemic, we were the 48th worst performing state economy. In the 2 years post the pandemic, we have been the 15th best. For the last 2 years we have been the best performing economy in the region (that's right - back to back champs). Ours is a $280B economy - something that big doesn't just change trajectory on its own - some externality must help explain it.

And I would argue that it was the pandemic. A pandemic none of us wanted changed certain economic rules in ways that have benefitted a State like Connecticut. When faced with more flexibility on where to live, more are choosing the State of CT. And why not? We rank well on the softer elements, like quality of life, quality of education, quality of healthcare.

Conclusion

As I travel the state, I encounter a fair amount of skepticism. In many ways, we are our own biggest critics.

And I understand why that skepticism exists. Anyone who lived through the lost decade experienced the headlines of a "permanent state of fiscal crisis," (2014), and GE leaving (2016).

But as I look at the data, I see cause for optimism. And this matters because I would submit that skepticism is an economic toxin. If you don't believe the future will be brighter than the present, you don't invest. You don't start that business. You don't hire that person. You don't buy that piece of equipment.

I call them like I see them, and what I see suggests Connecticut is experiencing a moment right now. Economic momentum that we haven't see in almost 20 years. If you look at these trends and are still skeptical, that remains your perogative.

Just get out of our way. Because we've got work to do.