WETHERSFIELD, CT — The latest employment numbers for the state have a leading economist believing another recession will hit before Connecticut reclaims all the jobs it lost during the Great Recession.
Preliminary employment estimates, released Thursday, show the state lost 2,000 nonfarm jobs in September, according to the U.S. Bureau of Labor Statistics (BLS).
August’s originally released job loss of 3,900 was revised further to a loss of 4,200 jobs.
That means, over the full year, employment has only grown by 3,500 jobs based on sampling by the BLS.
Those numbers were enough for Datacore Partners Economist Don Klepper-Smith to sound the recession warnings.
Klepper-Smith said the state’s economy has lost 7,900 jobs over the last three months and is up a fractional 0.4 percent for the first nine months of the year. He said the broader body of data suggests that a full job recovery in Connecticut is not likely to occur until late 2019.
He said the aggregate data now shows the Connecticut economy “moving sideways,” while the risk of a recession rises.
It’s also important to note that the BLS sampling method has been overestimating job figures for the last few years. According to CTNewsJunkie’s analysis of the employment data, the employment figures reported each month based on sampling during 2016 were overestimated by an average of 5,425 jobs per month.
Connecticut is 28,400 jobs away from attaining full recovery. That means that state has only recovered 76.2 percent of the jobs it lost during the Great Recession.
“This means that Connecticut is not likely to revisit its prior job peak of 1,713,300 jobs achieved in early 2008 anytime soon, and that we’re more apt to see the onset of a full-blown domestic recession before that time,” Klepper-Smith concluded.
While the Department of Labor’s assessment of the numbers weren’t as pessimistic as Klepper-Smith’s, it wasn’t exactly rosy.
“September’s decline of 2,000 seasonally adjusted payroll jobs caps a slow third quarter for Connecticut job growth,” Andy Condon, director of research for the Connecticut Labor Department, said. “Annual job growth is now only 3,500, though the private sector is doing considerably better.”
Klepper-Smith wasn’t as kind.
“It’s not an overstatement to say that the state’s economy has been challenged in a major way as profound structural changes, often ignored by policy makers, have come home to roost in a major way,” Klepper-Smith said.
He said the last 20 years of “disregard for taxpayer well-being has finally got us to a tipping point.”
This is a point that’s been highlighted often by another economist, UConn’s Fred Carstensen, who for the last few years has frequently suggested that the state should be basing its analysis on a longer frame of reference than just back to the recession of 2008.
In August 2016, Carstensen said that Connecticut’s core problem was the absence of job creation dating back to 1989, adding that since February 1989 the state had seen only 11 months in which total employment exceeded the previous high.
Pete Gioia, vice president and an economist with the Connecticut Business and Industry Association, said he’s not surprised by the job losses in Thursday’s report.
“We started this year with great momentum, even seeing as much as 11,000-plus job growth year over year,” Gioia said. “But over the last three months, it’s eroded dramatically.”
Gioia noted that it’s no surprise that the period of decline mirrors the same period that the state has gone without a new budget.
“Legislators must produce a state budget that business can believe in so we can begin to reverse this trend,” Gioia said.
Over the past nine months, private sector employment has slipped. Connecticut had recovered all of the private sector jobs it lost in the Great Recession earlier this year, only to see those gains erased over the past few months. After losing 1,100 private sectors jobs in September the state has only regained 95.3 percent of those jobs.
The government supersector, which includes jobs at the Native American casinos, declined by 900 jobs in September. The government supersector has lost a total of 23,200 positions since the recession began in March 2008.
Six of the 10 major industry supersectors lost employment in September, while four increased.
Professional and business services led growing industries with 1,100 new net jobs; financial activities was next with 900 added jobs; the information sector contributed 300 new jobs; and manufacturing added 200 jobs.
On the downside, construction and mining dropped 1,400 jobs; leisure and hospitality lost 1,200; education and health services shed 600 jobs; trade, transportation and utilities lost 300; and other services lost 100 jobs.
Three of the six Labor Market Areas (LMA) saw job losses, two remained unchanged, and only one — New Haven, saw job gains in September.
The New Haven LMA gained 1,200 jobs in September.
The Hartford-West Hartford-East Hartford LMA led the declines, dropping 2,100 jobs.