Connecticut is expected to play catch-up and shed tens of thousands of jobs over the next six to nine months as it mimics a pattern of job losses that has swept the nation over the past three months, economists say.
The U.S. Labor Department reported Friday that the nation lost 240,000 jobs in October, bringing the total number of jobs lost this year to 1.2 million. That pushed the nation's unemployment rate to 6.5 percent from 6.1 percent in September, worse than economists expected and surpassing the high after the last recession in 2001. The jobless rate peaked at 6.3 percent in June 2003.
So far this year, Connecticut's job losses have been relatively moderate and not nearly as severe as the nation's. And although the state's job totals have remained essentially flat so far this year, the state's overall economy has outperformed the nation's. A healthy mix of industries, including aerospace, defense, health care and insurance, has resisted recessionary pressures.
Although the U.S. has lost nearly 1 percent of the total number of jobs this year, Connecticut has lost 4,000 jobs this year, only a quarter of 1 percent.
But now economists expect Connecticut to join the downward slide that has beset the national economy.
"From here on out, I think we're going to go the same way as the nation," state labor economist John Tirinzonie said. "We're going to see job losses at least through the second and third quarters of 2009."
Of the 1.2 million jobs that have been lost nationally this year, half disappeared in the past three months, a trend that does not bode well for the state.
For example, the state has lost jobs each month since August, including a sizable loss of 2,300 in September, and the state's weekly initial unemployment claims have continued to rise, climbing in September to their highest level in six years.
The state has not followed the pattern of the last recession from 2001 to 2003. Then, Connecticut entered the recession earlier than the nation and emerged later. Although the nation recovered the jobs it lost by 2005, it took the state until 2007 to recoup the more than 60,000 lost jobs.
Tirinzonie said he expects that this time around, state job losses will not be as high as in the last recession. He predicted that job losses would total 25,000 to 35,000 during the next year.
"That's the more optimistic forecast," Tirinzonie said. "Other economists are saying it will be more in the 60,000 to 90,000 range."
Don Klepper-Smith, chairman of the governor's economic advisory panel, predicted that job losses will total 60,000 to 80,000. He based the higher estimate, in part, on the effect that Wall Street layoffs, which are expected to be in the 40,000 to 60,000 range, will have on residents in the southwestern part of the state. No one knows exactly how many Connecticut residents work in financial services jobs in New York City.
"This was a sobering jobs report," Klepper-Smith said. "It reflects significant deterioration in the U.S. labor markets, and it's confirmation that we've been in recession now for the last three quarters.
"Jobs are down, stocks are down, median housing prices are down. You marry that with the lowest consumer confidence level in 41 years. Consumers are feeling less wealthy, and they're not in the mood to spend."
As U.S. consumers watch jobs disappear, they'll probably retrench even further, spelling more trouble for the sinking economy.
Meanwhile, people who have jobs saw only modest wage gains, according to the national report. Average hourly earnings rose to $18.21 in October, a 0.2 percent increase from the previous month.
In the past year, wages have grown 3.5 percent, but paychecks aren't stretching that far because high food, energy and other prices have propelled overall inflation.
To prevent the country from sinking into a deep and painful recession, the Federal Reserve last week ratcheted down a key interest rate to 1 percent and left the door open to further reductions.
Many expect the national unemployment rate to climb to 8 percent, and possibly higher next year. In the 1980-82 recession, the unemployment rate rose as high as 10.8 percent before inching down.
Even as Connecticut sits at a somewhat optimistic job level, trouble is beginning to mount.
The Hartford Financial Services Group confirmed Monday that it will lay off 125 employees in Greater Hartford and 500 overall because of financial constraints.
Greenwood Publishing Group Inc. in Westport notified the state that it could lay off as many as 150 workers in December. An unidentified Stamford company told the state it expects to lay off as many as 350 workers from January 2009 through April 2010.
MeadWestvaco said it would lay off 75 workers at its Enfield factory by the end of the year. Connecticut Public Broadcasting announced the layoff of 10 of its 87 employees on Friday.
BAE Systems Ship Repair in Groton, which notified the state that it plans to close its Maritime Engineering & Services business, expects to lay off more than 130 workers in December.
"It's going to be worse than the last recession," Klepper-Smith said. "I see job losses in the state exceeding 60,000. But it's not going to be as bad as the great recession from 1989 to 1992, in which the state lost 160,000 jobs. The next two or three quarters are going to constitute tough sledding for businesses and consumers."
October's national employment decline marked the 10th straight month of payroll reductions, and government revisions showed that job losses countrywide in August and September turned out to be much deeper. Employers cut 127,000 positions in August, compared with the 73,000 previously reported. A total of 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.
President Bush said the dismal employment figures reflect "the difficult challenges confronting the economy" and urged the country to have patience, saying unprecedented government measures — including a $700 billion financial bailout package — will take time to work.
"I understand that Americans remain deeply concerned about the challenges facing our economy, but our economy has overcome great challenges before, and we can be confident that it will do so again," Bush said.
An Associated Press report is included in this story.
Reprinted with permission of the Hartford Courant.
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