Federal Tax Changes Also Seen as Having Impact
The steady stream of news emanating from the State Capitol in regards to taxes and fees – and changes to federal tax laws - may be taking its toll on state residents’ view of their own and the state’s financial prospects, according to the latest InformCT Consumer Confidence Survey, as optimism continues to struggle to gain a foothold among state residents.
The survey found that more state residents say they are worse off financially than six months ago (33%), than say they are better off (26%). In the fourth quarter of 2018, the numbers were even at 31%-31%; a year ago the breakdown was a 31%-30%.
Looking ahead, 37% say they expect that in six months they will feel better off financially. That is a drop from the end of 2018, when 47% had that view. The percentage who expect their personal finances to be better in six months is the lowest it has been in more than a year (4th quarter of 2017, 36%).
When asked if they “feel that the Connecticut economy is improving,” more residents disagreed (44%) than agreed (25%), with 31% not sure. Those numbers are virtually unchanged from a year ago (45%-24%-31%).
Among the concerns that continue to be on the mind of Connecticut residents, 59% are concerned about being able to afford health insurance, unchanged from a year ago; and 50% don’t believe they will have enough money to retire comfortably, virtually unchanged from a year ago (49%).
InformCT is a public-private partnership that provides independent, non-partisan research, analysis, and public outreach to help create fact-based dialogue and action in Connecticut. The survey, conducted quarterly since 2015, is administered by researchers from the Connecticut Economic Resource Center, Inc. The latest survey results are for the first quarter of 2019.
Living in Connecticut
For the first time in the survey’s four years, more that 30 percent of state residents disagreed with the statement “Connecticut is a good place to live and raise a family.” Although the margin, 47% agreeing versus 35% disagreeing, continues to reflect that more residents have a favorable view of living in the state, it is the narrowest margin since the quarterly survey began in the first quarter of 2015. A year ago, the margin was 47% - 29%; it was its widest in the 4th quarter of 2016, at 57% - 23%.
Yet, the percentage who indicated that it was likely they would move from the state within the next five years dropped from 47% in the fourth quarter of 2018 to 40% in the most recent quarter, the same percentage as a year ago. Now, 40% say a move is likely while 32% say it is unlikely, and 28% are unsure.
Personal concern about jobs has lessened slightly, with the percentage expressing concern that “my job or that of my spouse/partner is in jeopardy,” edging down from 35% to 33%, the identical percentage as a year ago, and less than in the first quarter of 2015 (38%), 2016 (42%), and 2017 (37%).
About one-third of respondents indicated that they expected to make a major consumer expenditure for furniture or some other product in the next six months, the third consecutive quarter that number has fallen slightly, down from 40% a year ago. In the survey, 24% indicated a new car purchase was likely in the next six months, and 14% expected to refinance their home or purchase a new home.
Headed into the April 15 tax filing deadline, 32% of survey respondents who had or will have filed taxes this year expected a smaller refund than last year, 5% expected to make a payment this year after receiving a refund last year, and 6% expected to make a larger payment than last year. Comparatively, 24% anticipated a larger refund and 4% expected that they payment would be smaller than a year ago. Among those with incomes of less than $50,000, more than half (51%) anticipated a smaller refund than last year – while only 27% of those with incomes above $100,000 had that expectation.
While nearly two-thirds overall did not anticipate an impact on their charitable giving, 29% said they would be giving less to charitable causes. More than 40% of those with incomes under $100,000 indicated they expected their charitable donations would be curtailed.
Regarding the impact of federal changes to the State and Local Tax (SALT) deduction, 37% said they anticipated an effect on their tax liability, while 29% did not. One-third (34%) were uncertain about the SALT change. Those with higher incomes anticipated more of an effect, with nearly half of those with incomes in excess of $100,000 expressing that view.
State of Business & Jobs
Just over half of state residents say that overall business conditions in the state are about the same as six months ago (52%), with 19% expressing the view that conditions are better and 28% saying they’ve become worse. Looking ahead, there is slightly more optimism, with 48% expecting business conditions to remain the same, 27% saying conditions will improve and 27% saying conditions will worsen.
The percentage of state residents who believe “there are plenty of jobs for anyone who wants to work” 23%, is tied for the highest percentage in four years of quarterly surveys. Yet a nearly identical number, 22%, believe “jobs are very hard to get” and the majority, 55%, say that “there are some jobs but not enough” in Connecticut.
Six in ten state residents (61%) expect the state’s employment situation to remain about the same six months from now, the same percentage as those who held that view in the previous quarter, and the sixth consecutive quarter where that percentage has exceeded 60%. The survey found that 21% expect the employment situation will be better, while 18% anticipate it will be worse.
The online survey of 505 state residents, conducted in late March 2019, has a margin of error of 4 percent.