Connecticut added 7,000 jobs in the first quarter of 2012, the second biggest quarterly increase of the recovery to date, say economists in the newly released issue of The Connecticut Economy, published by the economics department at the University of Connecticut.
The job gain resulted in a new 12-quarter low of 7.8 per cent in the unemployment rate in the state.
Three of the state’s four major labor markets should see more jobs added by 2013, with the Bridgeport-Stamford market gaining the most, at 4,800 projected new jobs, according to the quarterly analysis by economists in the College of Liberal Arts and Sciences at UConn.
Jobless rates are expected to continue to drop in all market areas. Unemployment could dip below 7 percent in New Haven, the area that can expect the fastest decline, the analysis found.
The report cautioned, however, that its forecast hinges on the U.S. economy growing at about 2.5 percent in upcoming quarters, given a strong historical relationship between the U.S. GDP and Connecticut job growth. Figures released last week by the U.S. Department of Labor included a revised assessment of the country’s first quarter economic growth, down to 1.9 percent from 2.2 percent.
The economists warned also of the “ominous threat” of another recession in 2013, when the Bush tax cuts, a payroll tax holiday, and extended unemployment benefits end and automatic federal budget cuts are scheduled to go into effect.
The UConn economists report that the decline in housing prices in Connecticut will continue in all areas of the state except the New Haven market, where prices are improving. However, statewide declines are occurring at a slower pace than a year ago. Construction permits for new housing are expected to remain depressed, the economists found.
While the jobs forecast for Connecticut is upbeat, the question posed in this issue of the quarterly magazine is, “Is this another false start, or the Real McCoy?”
Warm weather over the winter months helped the construction industry and retailers, and this may have contributed to the increase, writes Steven Lanza, executive editor. But even without construction and retail growth, the state still gained 2,900 jobs in the first quarter of this year. The health sector was particularly robust, adding 3,000 jobs.
The quarter’s biggest drop was in finance, which lost 1,400 jobs.
The Connecticut Economy’s new issue also reports on:
· Expected stability in public school enrollment in most of the state, opening opportunities for the state to “facilitate adjustments” in policies that address school performance improvements.
· An assessment of Connecticut’s “arsenal” of tax incentives and their effectiveness
· An analysis of whether the state’s array of taxes, from the income tax and general sales tax to fees – efficiently balances risk and return.
· A column by Kevin B. Sullivan, commissioner of Revenue Services, on themes emerging in the work of the Governor’s Business Tax Task Force, which is examining the state’s business taxes and tax benefits.
“At the very least, tax benefits need to be better targeted to strategic state economic purposes, more consistent in availability and use, and clearly accountable for employment, research and development, or productivity gains,” he writes.