Moody's Reclassifies Recession In Hartford And Norwich-New London Regions
July 25, 2009
A recent report from Moody's economy.com listed the Hartford and Norwich- New London regions as two of the first 23 metropolitan areas in the country to see a bottoming-out of the recession.
But Connecticut economists say you should take a closer look at the data underlying the report before breaking out the champagne to toast the recession's end.
The most recent issue of the Adversity Index, a monthly report from Moody's economy.com and msnbc.com that gauges the economic health of the country's 381 metro areas, lists the Hartford- West Hartford- East Hartford and Norwich-New London areas as some of the few places in the country where the recession appears to be "moderating."
But the index was based on employment, housing and production data from May, when Connecticut reported an unusual rise in employment. It was also issued well before Pratt & Whitney announced that it may shut down a plant in Cheshire and a unit in East Hartford that together employ about 1,000.
"It would be nice if it were true," said Edward Deak, an economics professor at Fairfield University, "but the May numbers were particularly good-looking for Connecticut. Then you look into June, and there were 4,800 jobs lost." Throw in possible job losses at Pratt & Whitney and the Obama administration's move to cease production of additional F-22 fighter jets, Deak said, "and we're looking at a substantial upheaval in production and employment in the Hartford area."
Andrew Gledhill, economist for economy.com, said Hartford's and Norwich's receding unemployment rates in May were largely what landed the areas in the "moderating recession" category.
The Adversity Index has traditionally measured changes in employment, housing starts, industrial production and house prices to label geographic areas as being in recession, at risk of recession, recovering from recession or expanding. But now that virtually every metro area falls into the "in recession" category, economists decided to create a new category — moderating recession.
The latest report is the first to reflect the new category and identify metro areas where the recession seems to be nearing an end. Gledhill warned Friday that those areas won't necessarily be the first to rise from the ashes.
"There's always the risk that they can slip back into an even deeper recession," he said, "especially Hartford, an area largely dependent on the financial industry, that sticks out as a risk to me."
Economist Donald L. Klepper-Smith, chairman of the governor's council of economic advisers, said that comparing this year's job losses to the massive cuts of last winter shows that Connecticut appears to be "in the midst of a bottoming process."
But the death of the F-22, the production of which is responsible for 2,000 to 4,000 jobs in Connecticut, would deal a huge blow to the state's economy, said Klepper-Smith, of DataCore Partners Inc. in New Haven.
"The road to recovery is going to be one with potholes, where you take a step forward and a half-step back," he said.
Reprinted with permission of the Hartford Courant.
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