The state can expect little or no job growth in the next few quarters, although “the economy could beat expectations,” says the Fall 2011 issue of The Connecticut Economy quarterly magazine.
If it does, writes editor Steven P. Lanza, the state’s job count could increase by 8,000 jobs by the third quarter of 2012. If GDP growth lags, however, the more pessimistic view would leave Connecticut with 1,000 fewer jobs a year from now.
“With U.S. growth so slow, one big shock could be enough to push GDP into negative territory,” Lanza warns.
This could all change if a national jobs plan, such as the one proposed by President Obama last week, is put in place.
Economists have lowered their expectations for this year’s third-quarter growth to 2.1 percent, down from an average 3.4 percent just this spring, he says. A recent Wall Street Journal survey of economic forecasters found that while the national GDP will strengthen in coming months, it will remain well below 3 percent, the long-term average growth rate for the U.S. economy.
Since Connecticut job growth is tied to national GDP growth, the outlook remains stalled, Lanza concludes.
“At best, Connecticut will add only 2,700 jobs quarterly – barely matching the state’s long-run average growth rate,” he says.
Still, there are bright spots that could improve the outlook, he says: Oil prices are dropping, banks are lending, and the state reached a deal with its public service employees to avert layoffs.
Overall, the Connecticut economy is outperforming other New England states, the quarterly reports. Weekly earnings in the private sector in Connecticut are up 1.1 percent, although the gain has not kept pace with rising prices.
“The real fear now is that the slowing U.S. economy could start erasing the modest gains Connecticut has made so far,” he says.