The final 2016 labor report on payroll jobs and unemployment was a mixed bag.
In December, the state lost 1,700 jobs. At the same time Connecticut’s unemployment rate for December continued to fall from 4.7 to 4.4 percent.
“Connecticut’s December employment numbers continued the recent trend of mixed signals from the two monthly employment series produced by the Bureau of Labor Statistics,” Andy Condon, Director of the Office of Research, said. “While we do not yet have supporting data, a combination of tight labor markets, an aging workforce, increased self-employment and growing out-of-state commuting could explain slowing job growth and rapidly declining unemployment rates.”
The numbers for 2016 will be adjusted in March, but if the numbers originally reported for the year hold then it looks as if Connecticut lost 2,000 jobs in 2016 when compared to 2015.
Don Klepper-Smith, an economist with DataCore Partners, warned against using the year-over-year figure.
He said using an average annual number shows that Connecticut gained 11,600 jobs or 0.7 percent in 2016.
This growth rate of 0.7 percent is still about two-thirds of Connecticut’s long-term average annual growth rate of 1.1 percent seen between 1960 and 2015.
“When using just a December to December metric, you omit the fact that jobs in those other eleven months have generated specific levels of incomes, spending, tax revenues, and economic activity which are not included in the December to December calculation,” Klepper-Smith said.
The Connecticut economy has now added 83,800 jobs on a cumulative basis as of December 2016, equating to an average monthly gain of about 1,000 jobs per month.
“This means we’re presently about 35,300 jobs from attaining full job recovery, and are not likely to see full job recovery until sometime in 2019 at the current pace,” Klepper-Smith said. “Odds are we’ll see a full-blown domestic recession before then, which implies that the job high of 1,713,300 set in March 2008 isn’t likely to be reached anytime soon.”
Klepper-Smith pointed out that recent trends in nonfarm employment continue to be a concern for the state’s economy. He said year-to-date total tax revenues are off 7.1 percent, while corporate tax revenues are up 13.8 percent and personal income tax revenue are down 8 percent and sales and use tax revenues are down 8.6 percent.
Connecticut’s labor market underperformed in 2016 and the slow rate of expansion will be problematic for the state’s economy, Klepper-Smith concluded.
Connecticut has only recovered 70 percent of the jobs lost during the 2008-2010 recession.
“We have a significant challenge going forward in terms of improving our economy particularly in creating jobs,” Connecticut Business and Industry Association Economist Pete Gioia said.
Connecticut’s job recovery is vastly different when compared with neighboring Massachusetts. The Bay State added 6,600 jobs in December, gaining 75,000 new jobs in 2016.
Massachusetts recovered 313 percent of jobs lost during the economic downturn.
“How we can have a discrepancy of 77,000 jobs with our neighbor to the north on a year-over-year basis should really set off alarm bells and questions for policymakers,” Gioia said. “These numbers only underscore the governor’s message emphasizing the need for stability, predictability, and restoring business confidence.”
Kelly Donnelly, a spokeswoman for Gov. Dannel P. Malloy, said job creation has been a top priority.
“And with the recent agreements that we’ve secured with Sikorsky, UTC and others, the state is moving in the right direction,” Donnelly said. “But we also know that there is work to be done to make the state budget more predictable and the economy more stable, so that we continue to foster a better business environment to expand and grow jobs.”
