Bleak outlook seen for region's jobs

Even as Connecticut as a whole posted "one of the healthiest job gains of the recovery" last quarter, the Norwich-New London region continues to bleed jobs, according to a new University of Connecticut report.

And the summer issue of The Connecticut Economy, released Thursday, predicted the region would continue to lose another 1,000 or more jobs over the next year.

"What you guys really could use down there is more diversity of the job base," Steven P. Lanza, a UConn economist and managing editor of the quarterly, said in a phone interview.

Lanza pointed out that the Norwich-New London area, which includes Westerly, relies on only a few major employers, and at least three of them - Mohegan Sun and Foxwoods Resort casinos and Pfizer Inc. - have been in a downsizing mode.

At the same time, another major part of the local economy, leisure and hospitality, has been in a prolonged slump as well, he said.

The UConn report said the loss of gaming jobs - which amounted to about 350 in the last quarter alone - was "a big reason reovery has eluded this major labor market area."

In the past year, the region lost about 3,800 jobs, according to the UConn report, while Connecticut as a whole gained 3,400 positions in the last quarter - after having been at a virtual standstill for the previous three quarters.

Norwich-New London recorded a 2.6 percent job loss between the first quarter of last year and the same period in 2013, a higher rate of attrition than in any other region.

At the same time, the region's unemployment rate fell by a tenth of a point to 8.7 percent. And the UConn report predicts a steady decline in the rate over the next year to about 7.5 percent, "possible if workers exit the labor force for lack of job opportunities."

Lanza said in his forecast section that, given predicted growth nationwide, "Connecticut could average about 3,300 new jobs in each of the coming quarters." And things could improve even more dramatically if housing, just starting to rebound, starts to take off.

In Norwich-New London, however, predictions are for constant-quality home prices to fall by double digits over the next year, with the worst performance being turned in over the next two quarters.

Lanza said the situation could grow even more dismal if the effects of sequestration turn out to be as serious as some predict. In fact, one economic model has predicted that sequestration - which limits defense spending and is leading to furloughs nationwide - could cost Connecticut as a whole 40,000 jobs.

This would more than wipe out predictions of statewide job gains over the next year of, at best, 20,000 or so, Lanza said. And it would hit southeastern Connecticut particularly hard, he added, since defense-related work accounts for about 10 percent of the local economy.

"How many years after the end of the Cold War, your economy is still defense-related manufacturing to a bigger extent than in other areas," Lanza said.


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