Citing troubling economic forecasts and Trump-era trade policies, Senate President Martin Looney and Majority Leader Bob Duff called Monday on the Department of Labor to ensure it is prepared to respond to an economic downturn and a surge in unemployment.
In a letter sent to Department of Labor Commissioner Danté Bartolomeo, Looney and Duff expressed concern about national recession predictions and the compounding impact of lingering tariffs on Connecticut’s manufacturing, agriculture, and transportation sectors.
“We are already seeing signs of distress from businesses facing higher costs and supply chain complications,” the letter states. “We fear a flurry of layoffs may soon follow.”
The Senate leaders emphasized the importance of a proactive approach, requesting updates on the department’s current operational readiness, including:
- Whether the unemployment claims system has recently undergone stress testing
- Plans for temporary staffing increases in the event of a spike in claims
- Strategies to quickly inform displaced workers about how to access assistance
Readers may recall that during the financial crisis brought on by the two-year COVID-19 pandemic, the State of Connecticut paid off the $1.2 billion it borrowed from the federal government to pay for unemployment benefits during the pandemic – thereby saving state businesses an excruciating increase in their per-employee unemployment insurance costs.
But the Trump tariffs will likely cause a massive spike in unemployment later this year, according to economists.
The Budget Lab at Yale predicts 740,000 job losses by the end of this year due solely to the economic impacts of the Trump tariffs – including a 64% price increase in clothing and textiles.
Lawrence Summers, a former top economic adviser to former President Barack Obama, told Bloomberg Television’s Wall Street Week with David Westin “It’s more likely than not that we’re going to have a recession—and in the context of a recession, we’ll see an extra two million people be unemployed. We’ll see losses in household income” of $5,000 per family or more.
A recent CNBC survey of its 130-member CEO Council of American corporate leaders found most predicted a recession is coming, prices are going to increase, and job losses are likely. “There is real potential for boycott of American goods that has a meaningful impact on corporates, who will then have to cut jobs. There is increased probability of stagflation,” said one CEO Council member.
The pro-business Connecticut Business and Industry Association has already laid out the impacts of Trump Tariffs on Connecticut companies and the state economy: a massive $3.2 billion tax on Connecticut businesses — mostly in manufacturing – due to the increased cost of imported materials and the expected impact on commodity exports.
“Ultimately, these tariffs will lead to higher costs for businesses and consumers and fewer exports and market opportunities for Connecticut companies,” said CBIA President and CEO Chris DiPentima. “The uncertainty and turmoil at the federal level, where things are changing on a daily basis, is not a good thing for businesses.”
