Christine Stuart photo
Steven Lanza, editor of the Connecticut Economy, a quarterly economic journal (Christine Stuart photo)

If it wasn’t for the policy uncertainty in Washington, another 20,000 people might have been employed in Connecticut today, the editor of the University of Connecticut’s economic journal said Tuesday.

Essentially, “we lost a year of recovery based on the uncertainty in Washington,” Steven Lanza, the editor of the quarterly Connecticut Economy told a small group gathered at the Capitol for its release.

From the 2011 budget showdown and debt ceiling crisis to the fiscal cliff in 2012, and the sequester and government shutdown in 2013, the federal government and Congress have “lurched from one artificially manufactured economic calamity to the next,” Lanza said.

All that uncertainty took a toll on Connecticut residents and businesses.

Connecticut lost nearly 120,000 jobs in the recession that started in 2008 and it’s unemployment rate doubled from less than 5 percent to more than 9 percent. Connecticut added jobs during 13 of the last 14 quarters and it has recovered more than half or about 64,000 of the jobs lost since the start of the recession. But Lanza concluded that it would have added more.

“Absent the policy uncertainty in Washington, however, the gains might have totaled 20,000 more,” Lanza wrote. “Uncertainty, then, has cost Connecticut a year’s worth of employment recovery.”

If Congress is able to deal with the budget and debt ceiling deadlines it set for itself, then Connecticut is expected to add 6,300 jobs each quarter next year. But Lanza said that if it fails to do that then this year’s slowdown in job growth to about 5,300 jobs per quarter could be “an early harbinger of the troubles the state economy might face should Washington again allow the federal government to grind to a halt.”

The good news is that for the first time in three years the labor force increased because more people were looking for work, but recovery is still fragile, Lanza said.

Connecticut saw job gains this year, but some of that growth dropped off in September and October because “we were feeling some of the effects here in Connecticut of what was going on in Washington D.C.,” he said.

At that time the federal government had no budget in place and it ended up shutting its doors until Oct. 16, one one day before the United States would have exhausted its borrowing capacity.

Until the third quarter of this year a lot of workers had “simply in frustration exited the labor force,” Lanza said. But the economy seems to be rebounding because those workers are returning.

“The workers are saying ‘a-ha the jobs are coming back, let me go look for one’,” Lanza said. “So that will instantly raise the unemployment rate because they’re now in the labor force — not working, but looking for work.”

That’s good news for Connecticut’s economy going forward.

“As long as we are, in fact, able to avoid the kinds of problems that we had this fall with the government shutdown and all of the gridlock, the prospects are for growth in 2014 and beyond,” Lanza said.

As long as GDP growth remains at about 2.8 percent and absent a fiscal crisis, the state will add about 23,000 jobs next year, Lanza said.

But that optimistic outlook depends heavily upon what happens in Washington and some key sectors of the economy, such as manufacturing and financial services.

“Ever since the economy started to recover we’ve been buffeted by all these different bouts of uncertainty,” Lanza said.

In another analysis, Lanza determined that economic angst doesn’t necessarily carry the same weight across the nation. States where the word “uncertainty” received the most media attention during the 2010-2013 recovery were clustered closer to Washington. However, uncertainty also correlated with real economic variables and the use of the word also was higher in states where the unemployment rates have been slow to fall. Lanza based that analysis on a Google news search of the word “uncertainty.”