The Fairfield County region continues to rank among the state”™s leaders for job creation, however, Connecticut”™s tepid rate of recovery will likely extend through at least the end of 2013, according to a new report.
In the University of Connecticut”™s fall 2012 quarterly review of the state”™s economy, representatives of the school”™s economics department and the state Department of Labor forecast that employers in the Stamford-Bridgeport labor market area will add 2,400 jobs over the next year, with the region”™s unemployment rate falling from 7.5 percent to 7 percent.
In the Fairfield County region, employers in the trade, transportation and utilities; business services; and education and health care sectors have shown the most growth since the recovery began, according to the report.
Statewide, the report projects employers will add 8,000 jobs over the next 18 months, which UConn economist Steven P. Lanza, the publication”™s executive editor, described as “agonizingly slow job growth for Connecticut”™s economy.”
“Clearly, with this forecast we”™re seeing a scaling back of the outlook for Connecticut and for the region,” Lanza said at the report”™s presentation Sept. 17, hosted by the Business Council of Fairfield County at the Stamford offices of KPMG L.L.P.
Lanza said spending cuts by the public sector, declining average hourly wages, a hesitancy among consumers to increase household spending and the broad slowdown of the U.S. economy are all to blame for the lowered expectations for growth in Connecticut and in the county.
To date, the state”™s private sector employers are recovering jobs at a faster rate than in the previous two recessions, but Lanza said that the economy as a whole has yet to recover about 80,000 of the 120,000 or so jobs lost during the recession.
“So do the math,” Lanza said, and “you”™re looking at least another four years at this rate to just get back to where we left off back in 2008.”
The UConn report cites a recent survey of about 50 economists conducted by The Wall Street Journal, in which the median forecast calls for an average of 2.3 percent U.S. gross domestic product (GDP) growth over the next six quarters, with the uppermost group among those surveyed calling for an average of 2.7 percent U.S. GDP growth.
Even at 2.7 percent GDP growth, “that is really barely average for the U.S. economy”™s performance over the long term,” Lanza said. “So this picture that we”™re seeing really represents some new pessimism that we haven”™t seen in previous forecasts. ”¦that then translates, in our case, looking at our forecast for Connecticut, into a reduced forecast for job growth going forward.”
If the U.S. economy grows at an average rate of 2.3 percent over the next six quarters, Connecticut would likely see 8,000 new jobs, Lanza said, with that projection increasing to 15,000 new jobs if the U.S. economy grows at a 2.7 percent average rate.
In comparison, Lanza said, if the state”™s economy were to continue adding jobs at the current rate, employers would be projected to add 25,000 jobs over the next 18 months.
Among the economy”™s bright spots, Lanza said the state”™s housing market has showed tentative signs of a rebound. In addition, employers are beginning to increase hours, which he said could be a precursor to more hiring.
“We are starting to see indications nationally and also in Connecticut that the housing market might finally be turning the corner,” Lanza said, noting that in all but one of the state”™s major labor market areas, there was an uptick in home prices in the second quarter of 2012.
“Of course, one quarter”™s activity does not a trend make, but if you look at other indicators of economic or housing activity,” he said, such as the number of transactions and housing permits being sought, “both of those indicators have shown a more sustained rebound.”
