It’s looking good across the economic board in Connecticut. Unemployment is down, banks have easily weathered the recession and equity loan growth is up. But bankers should stay wary of changing interest rates, which the Federal Reserve likely will raise again, according to Paul Driscoll, regional manager for the Federal Deposit Insurance Corp.’s Division of Insurance Research.

Driscoll presented an overview of the national and Connecticut economies last Thursday at a seminar aimed toward bank directors and trustees.

The dropping unemployment rate has been a high point for Connecticut, Driscoll said in a later interview.

“It continues to be less than the national average,” he said.

As of July, Connecticut’s unemployment rate had declined sharply to 4.6 percent, its lowest level since September 2002, according to the FDIC’s fall quarterly report on Connecticut’s economy. The state’s unemployment level was more than a full percentage point lower than the nation’s, according to the report.

Meanwhile, Connecticut’s labor force grew more slowly than that of United States as a whole. The rate of growth for Connecticut’s labor market was 0.35 percent, while the nation’s rate of growth was 1.3 percent, according to the FDIC’s quarterly report.

“The mapping of this labor market performance measure … indicates that the state had acceptable performance relative to the nation,” the report states.

Hartford and Windham counties were the weakest performers over the past 10 years, while Middlesex and Tolland counties were the strongest, according to the report.

Driscoll also talked to bank directors and trustees about the composition of employment in various industries across the state.

“In lockstep with the nation, Connecticut has lost jobs in the manufacturing areas,” he said.

Manufacturing jobs across the country have been lost historically as factories and other industries moved from the Northeast to the South, then to Mexico. Now, Mexico is losing jobs to China, Driscoll said. The state also – like the rest of the nation – lost jobs in the information services industry.

But Connecticut is experiencing growth in industries like education, health and leisure, he said.

“The economy is chugging along,” Driscoll said.

Economic ‘Bounce’

Banks are another bright spot in Connecticut’s economy. The state’s banks did extremely well during the recession, Driscoll said. There was hardly a change in loan delinquencies compared with what happened in the last recession.

Capital levels are in good shape and growing, he said.

The state has seen a lot of growth in home equity loans, Driscoll said. They have been growing at a rate of 20 percent to 30 percent, far above total loan growth, because of increases in refinancing. Connecticut’s median growth rate for total loans was nearly 13 percent as of the end of June, according to the FDIC’s quarterly report. That is the largest growth rate posted in the past several years. Commercial loan growth slowed in the first half of this year to a median growth rate of 9 percent, according to the report. That occurred after growth rates near 20 percent were posted in recent years.

“Consistent with the strong housing market, home equity loans posted robust growth for the fifth year in a row,” according to the report.

While outstanding home equity loans grew strongly, unfunded commitments have also increased at a similar rate, according to the quarterly report. The median growth rate of unfunded commitments on home equity loans was 31 percent as of late June, according to the report. The median growth rate in each of the past three years has been under 30 percent.

Connecticut has also been enjoying an economic “bounce” from defense spending, Driscoll said. In the early and mid-1990s, defense spending all but disappeared. It has come back since the terrorist attacks of Sept. 11, 2001, and Connecticut has seen many of those defense contracts. Awards for Connecticut companies have increased since 2000, while awards for the rest of the New England states have stayed steady, Driscoll said.

In addition to giving bank directors and trustees overviews of the national and local economies, the FDIC has been cautioning bankers across the country to formulate plans for how they will manage risks associated with more interest rate increases, Driscoll said.

He also stressed at the seminar that bankers in Connecticut should recognize their increasingly important roles. As banks merge and grow, he noted, fewer banks survive. Connecticut went from having around 100 banks about 10 years ago to having about 60 today, Driscoll said. There also have been 15 de novo banks. In addition, the average size of a bank in terms of assets is much bigger now, at $1 billion. That makes individual banks more powerful and bank directors and trustees should understand that, Driscoll said. Banks today are more complex and bankers have bigger responsibilities, he noted.

The national economy likely will continue on its current path, even after next month’s presidential election, according to Jack Phelps, FDIC acting assistant director. Although the FDIC does not make forecasts, the country’s $11 trillion economy would not be immediately affected by the election’s outcome, Phelps said. But effects might be more apparent in the equity market, he added.