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UConn Study Predicts State Will Lose 100,000 Jobs, Won't Rebound Until 2010

LYNN DOAN

May 08, 2009

Even with federal stimulus money pouring in, the state will continue to lose jobs until mid-2010 and only begin to recover later that year at a sluggish pace, University of Connecticut economists say in a new forecast.

The recession will have claimed about 100,000 jobs when state employers' payrolls finally bottom out in the summer of 2010, UConn's Connecticut Center of Economic Analysis predicts in a report being released today.

The loss — just over half of which has already happened since last year — is far more than the 60,000 state jobs lost in and after the 2001 recession. The loss would fall well short of the 159,000 positions employers shed in the collapse of the early '90s.

But the loss could be worse than today's forecast. If the economy doesn't start feeling the effects of the stimulus by this year, center director Fred Carstensen said, "We can't see how deep the bottom will get. We literally don't have the tools in this forecasting framework to go out that far."

Connecticut has trailed the nation in job losses, and economists say that, given the large drop in U.S. exports and Connecticut's export-intensive economy, it will likely trail in recovery as well.

The center's new forecast is a dramatic deterioration from its February outlook, which predicted that — without the federal stimulus — job losses would reach 55,000 by the last quarter of 2010. The center has traditionally been much more cautious in its forecasts compared with other Connecticut economists, at one point predicting a total of 9,500 job losses by late 2010.

The downgrade was related to the devastation of the first three months of this year: The number of Connecticut job losses doubled in the first quarter of 2009 compared with the last quarter of 2008, and U.S. exports dropped by 30 percent in the first quarter of 2009.

"It's really ugly," Carstensen said.

The center's outlook predicts a long and weak recovery starting at the end of next year.

"This is but the beginning of a recovery, not a full-fledged one," according to the report.

Carstensen said that, even with the federal stimulus package, the state legislature will be "wrestling with a serious budget problem" going into fiscal year 2012.

The center's projections are now very similar to the forecasts from other Connecticut economists. Don Klepper-Smith, chairman of the governor's council of economic advisers, has predicted that the recession would claim 80,000 to 100,000 jobs before losses bottom out in the first half of 2010.

Klepper-Smith said Connecticut could see a "jobless recovery" by the end of this year, as total economic output rises.