Connecticut's Investment Employment Rising By Lincoln S. Dyer, Economist, DOL
Securities, Commodity Contracts, and Other Financial Investments and Related Activities (NAICS Industry 523) consists mainly of the specific investment-related activities and employment from worksites in the State. These include stock, bond, and commodity brokering, trading, and exchanges; investment banking; venture capital and investment clubs; portfolio management, including private equity investment, certain trust management and grant making, pension fund management, mutual funds, and hedge funds; investment advice; and all other financial investment activities including stock quotation services. For points in the following article, NAICS 523 industry components will be referred to from now on as investments or the securities industries. This fundamental branch of the Finance and Insurance (NAICS 52) sector in Connecticut comprises some of the highest paying and fastest expanding industry segments anywhere in the world. It is definitely where Connecticut's growth and money is for now. All the while, markets will fluctuate.
Credit Cycle or Business Cycle?
Money is flowing around worldwide after years of lowered global interest rates. The World Central Banks were creating the "carry trade" by keeping foreign exchange rates competitively devalued and fighting Keynesian deflation fears by expanding the money supply (e.g., expanding credit/printing money). This was coupled with huge U.S. trade deficits and the resulting froth of global liquidity put into the world's monetary system has been finding locations where high-performing, risk-adjusted rates of return on investment can originate. Connecticut appears to have that location and that expertise, turning expansive credit under uncertainty into real capital when successful. Accumulated capital resources are subsequently the real means of production. And just like CEO's of last century who set up many corporate headquarters in Connecticut, the current asset-money managers now want to live as well as work here too. Connecticut is not a cul-de-sac missing out on the global economy. Instead it is a money draw adapting to globalization. Connecticut is one of the leaders of wealth management, creation, and storage, reshaping 21st century global capitalism. Nutmeggers invest the world's excess liquidity through a growing avant-garde investment sector of risk transfer instruments and financial savvy.