Over the next 10 quarters Connecticut will avoid a formal recession but will tally significant and growing job losses — about 7,000 lost by the end of 2009, according to a forecast released today by University of Connecticut economists at The Connecticut Center for Economic Analysis.
The losses will be mostly in manufacturing, with more modest cutbacks taking place in construction and government, according to the forecast.
At least there will be growth in output, the report predicts, but no more than 1.6 percent over the next two years. And the center expects “modest but slowing” job creation in services, financial services, trade, and other sectors, but those gains will fail to balance the job losses. The outlook sees Connecticut employment growing 0.4 percent in 2008, but then declining 0.3 percent in 2009, going from total employment of 1,704,000 in the fourth quarter of 2007 down to 1,697,000 by the end of 2009. The previous forecast had expected a rise to 1,713,000 by the end of 2009, so the current spiral will chop 17,000 jobs from potential.
Aside from services and manufacturing, the jobs outlook expects annual changes of less than one percent.
“Growth rates in the transportation, trade and public utilities, and finance insurance and real estate sectors will remain small but positive throughout the next two years,” Senior Research Fellow Peter Gunther said in the report.
Growth rates in construction and government will be barely positive in 2007 and 2008 but turn negative in 2009, Gunther wrote.
The only significant job growth will be in the service sector, the report said, which should expand by 2.1, 1.0, and 0.11 percent by the end of 2009. In manufacturing, job losses will accelerate particularly in non-durable goods. And with job growth too little to absorb new job-seekers, the report predicts manufacturing earnings to drop.
The Connecticut economy will reach $182 billion by the end of 2007, the report said, and continue its modest growth through 2009, rising to $185 billion.
“This continuing estimated positive but very sluggish growth of national growth and estimated Connecticut output through 2008 and 2009 argues that we will skirt, rather than falling into, a formal recession,” Gunther said. “But Connecticut will see no job creation, and very likely job losses.”
Unit housing permits dropped much more than expected three months ago, the report continued, falling nearly 21 percent in 2007.