Economic picture grim as job losses reappear
After hitting its lowest point this past spring since emerging from the the recent recession, the state’s economy might need until 2018 to recover all of the jobs it lost, the University of Connecticut is reporting today in its latest quarterly journal.
“At the current rate it will take nearly six more years to recover all the jobs lost in the last recession. And we may not be even that lucky,” states the introduction to The Connecticut Economy’s Fall 2012 issue. “Economists expect tepid … growth as far as the eye can see, which would translate into exceedingly sluggish job gains in coming quarters.”
Connecticut lost 4,000 jobs between April and June, representing 1/10th of all jobs it has recovered to date, as the growth in the nation’s gross domestic product (GDP) — the value of all goods and services produced — slowed to just 1.7 percent.
“With growth so slow we shouldn’t have expected much in the way of new Connecticut jobs,” wrote economist Steven P. Lanza, executive editor of the journal.
The Nutmeg State lost nearly 120,000 jobs during what many economists have argued was the worst economic downturn since The Great Depression of the 1930s. And it had regained only one-third of those lost jobs, about 40,000, until it lost more ground during the second quarter of this year.
Government job losses
Connecticut’s second-quarter job losses stem, in part, from local, state and federal governments’ curbing employment to control budgets and taxes. “The real impediment to recovery has been the absence of public-sector support for a convalescing economy, particularly nationally,” Lanza wrote in the report, released Monday morning.
Connecticut’s private-sector job recovery was outpacing its return from the recession of 2001-2003 until this past quarter, he added.
Two traditionally seasonal sectors of the economy also played a role in the second-quarter job numbers. Construction and retail trade both normally accelerate around April, but given the mild weather Connecticut experienced last winter, any gains from those sectors may have come early, in the first quarter of the year.
Further complicating matters, “neither households nor businesses have much appetite for spending,” Lanza wrote.
The consensus of nearly 50 economists polled by the Wall Street Journal projected national GDP growth will rise to 2.7 percent, but not until the end of next year. “But even that is an atypically slow pace of recovery,” Lanza added.
There was some good news in the latest journal, which noted that home sales and housing construction permits have grown at double-digit rates over the last 12 months. “We may finally be seeing a housing rebound,” Lanza wrote.
Still, those housing statistics come on the heels of a new federal report that showed Connecticut is leading the nation in declining home prices, one of just eight states to lose ground in the second quarter of this year.
And Fairfield County took a particularly strong hit, with prices down more than 8 percent from 2011.
While median prices for single-family homes rose nationally by 3 percent during the second quarter — compared with the same period in 2011 — in Connecticut they fell by 4.7 percent, according to the latest House Price Index prepared by the Federal Housing Finance Agency.
Given the overall outlook for the state’s economy, the UConn journal warned the state could expect to add only about 8,000 jobs over the next year-and-a-half.
That warning echoes one from another recent UConn publication.
Many economists say the last recession began nationally in December 2007 and ended by July 2009. In Connecticut, which tends to both enter and leave economic downswings later than the national average, the recession generally is charted between March 2008 and the first few months of 2010.
But the Connecticut Center for Economic Analysis, citing new federal economic data, reported in late August that the state’s economy was damaged more severely than most economists originally thought. And based on that data, it appears the recession technically hasn’t ended yet.
A recession generally is described as two consecutive quarters of declining GDP. That downturn is considered over when business productivity returns to pre-recession levels, even if employment levels have not.
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