No. 1 In The Nation For Growth? Metro Hartford? Yup
Output Of Goods And Services Up 11.5 Percent, But Unemployment Remains High
By MARA LEE
September 15, 2011
As rotten as this anemic recovery feels, Metro Hartford still has it better than all other regions among the 100 largest regions in the nation by one key measure, at least.
The capital region churned out a gain of 11.5 percent in goods and services produced, from just before the recession in the fall of 2007 through June 2011, according to a report being released Thursday by the Brookings Institution No. 1 in the country.
"That's wonderful. Every piece of good news helps here," said Don Klepper-Smith, an economist in New Haven who tracks the Connecticut economy for Farmington Bank. "Every bit of good news helps us with confidence."
Metro Hartford also has fewer bank-owned properties due to foreclosures than all but five other regions. And its economic growth from the depths of the recession through June 2011 is third-best in the country.
But in the measures that matter most to the average person how many jobs were recovered, and how far unemployment fell Metro Hartford doesn't look quite so good.
The region didn't lose as many jobs as most of the others during the recession, because it didn't have a building boom and bust, and its state government jobs have been relatively stable. So even though the number of jobs in Hartford, Tolland and Middlesex counties in June 2011 is 1 percent below the number at the beginning of 2008, that's a better jobs record than 91 of the 100 largest metros.
Only four regions in the country had more jobs in June of this year than they did at the recession's start.
Worse, for Metro Hartford, the region's growth in jobs from the depths of the recession through June ranked No. 34 in the nation. And worse still, its unemployment rate isn't improving at all.
Metro Hartford's jobless rate was a little over 9.2 percent in June a bottom-half ranking, at 55 and in the last three years, the region has seen its unemployment rate rise by 3.5 percentage points, placing it in the middle at No. 50.
The authors of the report, Howard Wial and Richard Shearer, made the point that virtually all of the top performing regions relied on government, education or energy production. Metro Hartford has also benefited from a stable insurance sector and strong defense spending. The report uses data from Moody's Analytics, an economic analysis firm in Pennsylvania.
"We are off the lows," Klepper-Smith said. "People have thought we have continued to lose jobs, and that's not the case."
The 11.5 percent growth in the size of Metro Hartford's economy compares with an average of 0.5 percent for the 100 largest regions. New Haven lost 2.1 percent, ranking it No. 68; and Fairfield County shrank by 1.2 percent, No. 63 in the nation.
How is it that the size of the Hartford area's economy grew 20 times faster than the metropolitan national average, but still, unemployment hasn't budged?
Klepper-Smith calls it the substitution effect. With the Federal Reserve keeping interest rates at or near zero, and federal tax policy favoring capital equipment, many companies would rather spend their cash on labor-saving devices, not people.
"The emphasis right now is on capital investment, and many firms have opted to minimize the number of employees," he said. "That's a real concern. We're not putting a lot of these folks to work."
Across all 100 metros, housing prices have fallen an average of 30 percent since the peak. In Hartford, it's 21 percent; in New Haven, it's 28 percent, and in Fairfield County, it's 29 percent.
On Tuesday, the U.S. Department of Commerce also reported that Hartford had better than average economic growth in 2010.
Reprinted with permission of the Hartford Courant.
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