Economists: State’s recovery likely to slow

STAMFORD – The nation’s economic comeback has hit a lull, and by next year Connecticut may follow suit, University of Connecticut economists warn.

Connecticut will have gained 20,000 jobs by year’s end, according to projections by contributors to The Connecticut Economy, the university’s quarterly economic review. But job growth in 2011 might top out at half that number.

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Steven Lanza: ‘We’re in for the big chill’

“The recovery is average at best,” economist and executive editor Steven P. Lanza said during Wednesday’s presentation of the latest quarterly review before about 100 business leaders gathered at UConn’s Stamford branch campus. “The big fear now is we’re in for the big chill.”

While the national economy slowed during the second quarter of 2010, non-farm jobs grew in this state by about 8,000, despite a big drop in Census government jobs, the review states. Professional and business services saw their first increase since before the recession began in March 2008 and manufacturing grew for the first time since mid-2006.

But despite these positive marks, other signs hinted that growth in Connecticut may be ready to slow down.

Though the state’s two largest labor markets, Hartford and Bridgeport-Stamford, both added jobs in the second quarter, the New Haven and New London markets lost ground.

“The recession’s severity and flagging support from federal stimulus funds are forcing budget cuts in schools and hospitals statewide,” the review noted, adding that the education and health care sectors lost a combined 1,100 jobs last quarter, their largest drop since the end of 2000.

Retailers, hotels, restaurants and bars all increased their payrolls during the second quarter of 2010 as consumer spending rose and average weekly earnings were up 3.5 percent compared with the second quarter of 2009. But most of that growth was tied to expanded worker hours rather than to pay increases, the review states.

UConn economists continue to predict job growth in three of the four labor markets by year’s end, with New London being the exception. But as the federal stimulus winds down and businesses refocus on building inventories back up, job growth could slow quickly.

“Normally, the recovery’s reins would pass to businesses and consumers,” the review states, “but thus far they have proven either reluctant or unable to seize them.”

According to Connecticut Labor Department statistics, the state lost just over 103,000 non-farm jobs between March 2008 and December 2009.

The review projects Connecticut’s gross domestic product, the chief measure of its overall economic output, will grow about 1 percent this year, better than the 3.4 percent loss recorded in 2009 but too meager to set the stage for major job growth in 2011, Lanza said.