Economists predict gloomy 2012 for region

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Connecticut lost 1,400 jobs between the second and third quarters of the year, and, though the Norwich-New London area gained 400 positions during the same period, the outlook locally is bleaker next year, according to a report released Monday by economists at the University of Connecticut.

Steve Lanza, executive editor of the winter 2012 edition of The Connecticut Economy, said the region had a job setback of 600 when comparing the third quarter of this year to the same period last year. And he expects the region to lose another 300 to 500 jobs over the course of the next year.

"We don't see the economy making significant progress without faster growth nationally," Lanza said in a phone interview after the release of the quarterly economic report and forecast.

Statewide, the New London and New Haven economies are struggling the hardest, according to the report.

Both regions are expected to lose several hundred jobs next year, with New London's unemployment rate rising from a current 8.6 percent to hover around 9 percent for most of 2012.

"New Haven is likely to retain its dubious distinction of the unemployment leader, though New London could make a run at the title," the report said.

Lanza blamed the Norwich-New London area's struggles on layoffs or expected layoffs at two of the region's major engines of growth - the Electric Boat shipyard and the pharmaceutical giant Pfizer Inc. - as well as continued softness in the gaming industry at Foxwoods and Mohegan Sun casinos.

"The big challenge now is what's happening in Massachusetts," he said, referring to the Bay State's approval of casino gambling. "That's going to be a real challenge for the state and the region in the near term."

Lanza said there are bright spots in the local economy.

He expects building permits to increase slightly in the coming year and said prices paid for comparable homes have risen significantly in the Norwich-New London area, from $217,000 in the second quarter to $229,000 last quarter. Prices are expected to jump again in the next two quarters before tapering off toward the end of 2012.

But the main focus of an economic rebound - increasing jobs in the state - remains elusive, according to the report.

Connecticut's job losses in the third quarter erased 40 percent of the gains seen in the second quarter of the year.

"So far this year the state has boosted its net employment count by a paltry 800 jobs per quarter," the review noted.

Gov. Dannel P. Malloy's initiatives to boost economic growth, including a $600 million jobs plan and a $300 million investment in the state by Maine-based Jackson Laboratory, are meant to end Connecticut's two decades of employment stagnation, the report noted.

"But on our current heading, any meaningful job gains will likely have to wait well into 2012," the report said.

Lanza said the Jackson labs deal will likely spur construction jobs near the University of Connecticut Health Center in Farmington next year and may well boost consumer confidence. But any permanent benefit from the deal likely will not be felt until a few years from now, he said.

Still, Lanza was hopeful his projections of a stagnant economy in Connecticut won't be the last word and that a strong rebound nationally could translate into better times ahead locally.

"We had a lot of surprises to the downside this past year, so maybe we're due a few surprises on the positive side next year," he said.

l.howard@theday.com

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