Job Increases Could Surpass Expectations
Connecticut’s 2012 job growth may surpass modest expectations when the Labor Department releases revised estimates later this month, according to the the University of Connecticut’s quarterly economic analysis.
In UConn’s “The Connecticut Economy” report, released Friday, economist Steven Lanza said current estimates that the state added barely 4,000 jobs were not surprising given that the national Gross Domestic Product grew only 2.2 percent in 2012.
Lanza said the state’s economy is influenced to a great extent by the performance of the national economy. Almost half of variations in Connecticut’s job growth can be attributed to changes in the GDP, he said.
With the national economy growing at a rate of about 2.2 percent last year, Lanza said Connecticut should have added around 6,000 jobs.
However, the state Labor Department undergoes an annual rebenchmarking process, where it revises its estimates to show more current data from tax records. The rebenchmarked estimates are due out later this month.
Lanza said the department expects to find the state added around 10,000 jobs, putting it “ahead of the game.” But not too far ahead. According to the report, in years of expansion since the 70s the state typically added around 25,000 jobs annually. Recently the number has been around 15,000..
Still 10,000 new jobs may be better than what is in store for 2013, Lanza said.
“Based on the current outlook, the state will struggle to add any new jobs in 2013,” he wrote.
Lanza said if current macro-economic forecasters published by the Wall Street Journal hold, this year’s growth in value of the nation’s goods and services would be beneath last year’s growth.
“Under this scenario, Connecticut’s employment slump would continue for two additional quarters, before gathering economic momentum helps turn job growth positive,” he wrote.
Though there may be growth in the last two quarters, it’s not likely to be much. Lanza said some estimates put job growth in the third quarter in the hundreds, with the fourth quarter barely breaking 1,000. However, other more optimistic estimates say there could be as much as 2,000 jobs added in the final quarter alone.
Lanza said the economic growth may also be impacted by what happens in Washington D.C.
“In recently steering clear of the fiscal cliff, we appear to have driven headlong into a dense fog of partisan wrangling over the debt ceiling and sequester—a European-style austerity response that could bring similar economic woes to our shores,” he wrote.
While some of the more pessimistic GDP growth estimates could have the state shedding thousands of jobs this year, Lanza said the average economist expects to see national GDP growth returning to long term trends next year.
“If it does, Connecticut could add more than 13,000 jobs next year,” he wrote.
In the short term, the country gained 246,000 private sector jobs in February, when unemployment fell from 7.9 percent to 7.7 percent, according to a Friday statement from the White House.
In January, the state Labor Department estimated Connecticut’s unemployment rate was 8.6 percent during the month of December. Connecticut unemployment figures for January and February are due out later this month.