THE CONNECTICUT ECONOMIC DIGEST Vol.7 No.3 A joint publication of the Connecticut Department of Labor & the Connecticut Department of Economic and Community Development MARCH 2002 2001: A Recession Odyssey By Jungmin Charles Joo, Associate Research Analyst, DOL ARTICLES hat an economic odyssey Recession?" the author of that W 2001 turned out to be. The article arrives at another conclu- Economic Review of long streak of yearly solid job sion, working with data on the Year 2001 ................................... 1-5 growth finally came to an end. previous year's benchmark and First Quarter 2002 Business The newly released revised different criteria for recession.) Climate Index ............................... 7 annual average data confirmed Last year’s downturn was that Connecticut nonfarm em- marked by severe job cuts in ployment declined in 2001 by 0.6 manufacturing and very weak percent, or 10,800 jobs, after employment growth in the ser- having added jobs in the last vices industries. It marked the eight years. The revised data ninth recession, on an annual show that Connecticut's season- average basis, in Connecticut ally adjusted total nonfarm since nonfarm employment employment peaked in July estimation began in 1939. As 2000, and rebounded somewhat the chart below shows, the in the beginning of 2001 before longest recession with the largest ALSO INSIDE starting its descent. Since number of jobs lost (-141,200, or employment is a prominent 8.7 percent) occurred during the Housing Update.................................. 7 measure of recession and recov- 1989-92 period (the years of Economic Indicators ery, July 2000 likely marks the annual average employment of Employment ....................................... 6 beginning of our current reces- on the Overall Economy ......................... 7 decline are indicated in gray Individual Data Items ....................... 8-10 sion. (In the article that follows bars). The most severe reces- Comparative Regional Data ............ 11 this, "Employment Indicators: Is sion, in terms of percent Economic Indicator Trends ....... 12-15 the Connecticut Economy in a changes, occurred towards the Labor Market Areas: Nonfarm Employment .................... 16-21 Labor Force ............................................ 22 Hours and Earnings .............................. 23 Connecticut Nonfarm Employment, 1939-2001 Housing Permits .................................... 23 Annual Averages, in Thousands Cities and Towns: 1,900 Labor Force ..................................... 24-25 The years of employment decline are in gray bars Housing Permits .................................... 26 1,700 Technical Notes ................................ 27 At a Glance ........................................ 28 1,500 1,300 In January... 1,100 900 l Employment ............... up 4,300 700 l Unemployment rate .......... 3.5% 500 l Housing permits .. down 29.2% 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 March 2002 THE CONNECTICUT ECONOMIC DIGEST THE CONNECTICUT end of World War II in 1944-45 chart below). After adding jobs in when almost 15 percent of jobs 1997 and 1998, manufacturing ECONOMIC DIGEST were lost (-110,600). backslid for the next consecutive The Connecticut Economic Digest is There were other distressing three years. In fact, 2001’s job published monthly by the Connecticut economic indicators in 2001 that loss was the largest since 1993. Department of Labor, Office of Research and the Connecticut Department of Economic and pointed to this inevitable reversal Most of the layoffs were from Community Development, Public Affairs and of economic growth. The unem- fabricated metal, industrial Strategic Planning Division. Its purpose is to ployment rate rose a full percent- machinery, electronic equipment, regularly provide users with a comprehensive age point to 3.3 percent last year, and printing & publishing manu- source for the most current, up-to-date data available on the workforce and economy of the breaking four consecutive years facturers. Inflation-adjusted state, within perspectives of the region and of decline. The labor force de- average hourly earnings of work- nation. clined also, making it the largest ers in manufacturing also The views expressed by authors are theirs percentage drop since 1994. dropped in 2001 to $9.26 after alone and do not necessarily reflect those of After steadily declining every year peaking in 1999 at $9.39. Even the Departments of Labor or Economic and Community Development. in the last decade, the number of the revised Connecticut Manufac- To receive this publication free of charge write initial claims for unemployment turing Production Index declined to: The Connecticut Economic Digest, suddenly rose sharply last year. in 2001 by the largest percentage Connecticut Department of Labor, Office of The Hartford help-wanted index since 1993. Research, 200 Folly Brook Boulevard, dropped for the third consecutive Wholesale trade, retail trade, Wethersfield, CT 06109-1114; email to [email protected]; or call: (860) 263- year. The number of new busi- and transportation and public 6275. Current subscribers who do not wish to ness starts suddenly fell last utilities (TPU) industries also continue receiving the publication or who have year, reversing five years of contributed to the overall employ- a change of address are asked to fill out the positive trends, while the count ment decline in 2001. Wholesale information on the back cover and return it to the above address. of business terminations trade employment, after succes- Contributing DOL Staff: Salvatore DiPillo, mounted. Also, the number of sive years of increases and Lincoln S. Dyer, Arthur Famiglietti, Noreen major attraction visitors to our peaking in 1998, has fallen in the Passardi, David F. Post, Joseph Slepski and State shrank for the second year, last three years. The State’s Erin C. Wilkins. Managing Editor: Jungmin as the air passenger count deteriorating economic condition Charles Joo. Contributing DECD Staff: Todd Bentsen, Kolie Chang, Robert Damroth and declined over the year, particu- became more evident when retail Mark Prisloe. We would also like to thank our larly since the events of Septem- trade and TPU employment associates at the Connecticut Center for ber 11. See page 5 for a full page decreased last year for the first Economic Analysis, University of Connecticut, of annual Connecticut economic time during the 1992-2001 for their contributions to the Digest. indicators for the years 1992 to period. The 2001 retail sales Connecticut 2001. figure also broke the positive Department of Labor growth trends of the past ten Industries years. Shaun B. Cashman, Commissioner Thomas E. Hutton, Deputy Commissioner Of the 10,800 jobs Connecti- Even the services industry, Ann Moore, Deputy Commissioner cut lost over the year, the manu- which had been adding over facturing industry lost 9,400 (See 10,000 jobs each year in the past Roger F. Therrien, Director Office of Research 200 Folly Brook Boulevard Wethersfield, CT 06109-1114 Phone: (860) 263-6275 Fax: (860) 263-6263 2000 to 2001 Employment Changes by Major Industry Division E-Mail: [email protected] Website: http://www.ctdol.state.ct.us/lmi 6,000 4,000 Connecticut Department Services Govt. 2,000 FIRE of Economic and Const. Community Development 0 James F. Abromaitis, Commissioner -2,000 TPU Rita Zangari, Deputy Commissioner Timothy H. Coppage, Deputy Commissioner -4,000 Wholesale Retail Public Affairs and Strategic Planning Division -6,000 Research Unit 505 Hudson Street -8,000 Hartford, CT 06106-2502 DECD -10,000 Phone: (860) 270-8165 RESEARCH Mfg. Fax: (860) 270-8188 E-Mail: [email protected] -12,000 Website: http://www.state.ct.us/ecd/research ●2 THE CONNECTICUT ECONOMIC DIGEST March 2002 Labor Market Areas 2000 to 2001 Employment Percent Changes by Labor Market Area In 2000, seven of the ten 3 labor market areas (LMAs) in Connecticut added jobs. Last 2 1.4 year, however, the opposite was true—seven of the ten LMAs lost 1 0.6 0.0 jobs. As the chart to the left 0 shows, the percentages of job decline ranged from 0.7 percent -0.7 -1 -0.6 -0.7 -0.7 -1.0 in the Torrington LMA to 1.7 -1.5 percent in the Waterbury LMA. -2 -1.6 -1.7 The Danielson and New London -3 LMAs were the only ones with positive employment growth over River New Lower the year, undoubtedly the result London Hartford Danbury Stamford Statewide Danielson Waterbury Torrington Bridgeport of the casino expansions. New Haven Among the ten LMAs, the largest percentage job decline in ten years, created only 2,400 new growing in the past five years, construction occurred in the jobs last year, and was unable to now showed essentially zero Danbury area last year. All but offset the heavy downsizing in growth. the Danielson LMA (where there the manufacturing sector this The government, and finance, was no change) experienced job time as it had in previous reces- insurance, and real estate (FIRE) losses in manufacturing over the sions. With the burst of the sectors also added more jobs over year—the largest percentage Internet “bubble,” the number of the year. Continued expansion of decline was in the Stamford area. business services jobs, which the casinos bolstered the local Two of the areas—Danbury and had been rapidly growing up government sector, which helped Waterbury—actually lost services until 2000, suddenly retreated to steadily increase overall em- jobs from a year ago. The 2000- last year. In addition, the con- ployment in government. FIRE’s 2001 changes in employment in struction industry was affected employment reached a ten-year all the major industry divisions by the impact of September 11 high in 2001, and has been of each LMA are shown in the and the sinking economy, despite gaining jobs in the last five years. table below. the Fed’s aggressive actions in Commercial banks and insurance lowering interest rates. This carriers, in particular, fared From Here to Recovery small but very sensitive industry, better over the year.