Economy's Strengths Sustainable?
By Mark Prisloe, Senior Economist

Connecticut's economy has shown remarkable resilience in the past year with signs of a slowing national economy all around. The outlook for 2001 is less robust, however, as the slowing national economy seems likely to impact Connecticut. Falling housing permits, slower employment growth, a recent dip in the Digest's leading employment index, as well as energy price hikes, poor stock market performance, and corporate earnings disappointments, along with six rate increases by the Federal Reserve are telling symptoms. Slower and more sustainable growth in the year ahead is still foreseen, but the "soft landing" expectation and any "new economy" growth scenario is less certain.

For sure, Connecticut earned high ratings for economic successes recently. The Corporation for Enterprise Development awarded the state "honor roll status." The Milken Institute ranked Connecticut as third best state in the nation for growth opportunities in the "new economy." And the National Alliance for Business selected Connecticut as "State of the Year", highlighting innovative efforts to raise student performance and improve the quality of the workforce. Even the unemployment rate in November, fell to 1.7 percent, the lowest ever recorded in the State.

In the New England Economic Project (NEEP) October 2000 forecast, Dr. Edward Deak notes that "Absent a national recession or severe growth pull-back, NEEP expects the Connecticut job gains to continue, averaging 16,000 positions per year 2001-2004 in line with the Economy.com view of a more moderate U.S. expansion." NEEP also expects growth in the Connecticut labor force averaging 11,000 annually to 2004. This compares with job growth of 20,300 in November 2000 from a year ago.

Uncertainty

Economic direction signaled by the Digest's leading and coincident indexes (on page 5), produced by the Connecticut Center for Economic Analysis (CCEA), is mixed. Uncertainty was also exhibited by the CCEA's analysis as reported for third quarter data: "Weaker than expected growth in real U.S. Gross Domestic Product (GDP) sent a chill through Connecticut this quarter. Connecticut's real Gross State Product (GSP) grew by a lower-than-expected 2.9% annualized growth rate in 2000-Q3 according to CCEA estimates. And with national figures showing an economy continuing to cool [real GDP growth was even revised downward to 2.4%], GSP growth is likely to moderate further, falling to a lower, though still respectable, 2.0% rate by this time next year." Writing in The Connecticut Economy, Dr. Steven P. Lanza also noted the General Drift Indicator (GDI), a composite measure of the four-quarter change in three coincident and four leading economic variables, reached a plateau. He noted: "The coincident index grew at its slowest rate in six-and-a-half years, and the leading index hit the skids once again."

Fortunately for Connecticut, all this seems to add up to a slowdown, but not a stoppage of real growth. Any national recession, usually signaled by a decline over two consecutive quarters in real GDP, seems remote. However, the national expansion is in an unprecedented 10th year now.

Key Trends

Key state economic variables were trending as follows at the time of this writing. Nonfarm employment increased by 300 in November, and was 20,300 higher than a year ago. The November unemployment rate of 1.7 percent was the lowest ever recorded in the State. Housing permits year-to-date through November 2000 were down 14.1 percent to 8,713 from 10,146 through November 1999. Construction contracts were up a surprising 35.8 percent in October from October a year ago. Personal income for first quarter 2001 is forecast to increase 4.7 percent from a year earlier to an aggregate $140 billion. Retail sales were up 7.3 percent through September. State tax revenues were up 4.1 percent paced by personal income taxes, up 11.9 percent. Consumer confidence levels were lower than a year ago in November in both the U.S. and New England, with the New England index dropping from the previous month by 11.7 percent. Long-term treasury rates were lower than a year ago as was the 30-year conventional mortgage rate at 7.75 percent. Thus there are numerous strengths in the Connecticut and regional economy as we approach the year 2001.

Conclusion

Overall, per the NEEP outlook, we can expect "more moderate, sustainable expansion, with low unemployment rates and steady growth in real personal income." The wolf is certainly not at the door, but there is sufficient uncertainty being signaled by national and state indicators and trends to prompt both continued watchfulness and careful monitoring of the economic variables this year.

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Town / City Profile: New Haven
By Jungmin Charles Joo, Associate Research Analyst, DOL

Introduction

New Haven, the third largest city in the State, has experienced steady employment growth in the last three years, and its unemployment rate was below the nation's in 1999.

Economy

The latest annual average data showed that there were 75,781 jobs in the city, up slightly from the previous year. The services and state government sectors drove most of the job gains. The transportation, communications, and public utilities (TPU) sector, however, lost a significant number of jobs over the year, along with retail trade and the manufacturing industries.

The average annual wage for all industries rose 2.8 percent over the year to $39,623. Wages increased in all sectors, except in agriculture, TPU, and retail trade. But TPU employees working in New Haven were paid the highest average annual wage at $58,910, followed by the workers in the federal government sector.

Over the span of the decade, New Haven's population and labor force have fluctuated and the current levels were still below that in 1990. The number of city residents who were employed declined from 1990 to 1994, then rose gradually for four straight years before dropping in 1999, remaining at a level well below that of 1990. However, even sharper declines in the number of unemployed persons in the city caused the jobless rate to fall significantly, to 3.9 percent in 1999, the lowest rate of the entire decade.

The number of the new housing permits authorized in 1999 was the largest in the last five years, and retail sales of New Haven businesses have been rising since 1996.

Outlook

According to the city, the Long Wharf Mall project is dead, but many biotechnology companies could move in instead. Science Park will get a new facelift, and is expected to also attract entrepreneurial firms. And then there is Yale, which will expand its high tech/biotech research facilities. Other plans for the city include: the relocation of Long Wharf Theatre to a downtown location; a 120-unit housing development in the downtown area; high-speed Amtrak rail service to and from the city; and completion of design for a downtown commuter station for Metro North.

Improving the public educational system, fostering entrepreneurship (particularly in high-tech industries such as biotechnology and information technology), and making downtown a much cleaner and safer environment will undoubtedly increase the number of new jobs and quality of life in the Elm City for years to come.

For further information on the city of New Haven or other cities and towns in Connecticut, visit http://www.ctdol.state.ct.us/lmi/lmidata.htm, or contact the Connecticut Department of Labor's labor market information unit at (860) 263-6275.

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Occupational Study: Computer Engineers
By Jungmin Charles Joo, Associate Research Analyst

Introduction

With today's rapidly evolving Information Age, some of the fastest-growing occupations are in computer-related fields both in the nation and Connecticut. One of these occupations is computer engineers, of which there are currently 4,850 employed (1998-99 estimate) in the State.

What Do They Do?

Computer engineers work with the hardware and software aspects of systems design and development. They usually apply the theories and principles of science and mathematics to design hardware, software, networks, and processes and to solve technical problems. They often work as part of a team that designs new computing devices or computer-related equipment, systems, or software.

Education & Training

Computer hardware engineers generally need a bachelor's degree in computer engineering or electrical engineering; software engineers are more likely to hold a degree in computer science or software engineering. For jobs in research laboratories or academic institutions, a Ph.D., or at least a master's degree, in computer science or engineering is usually required. Employers usually look for people who have broad knowledge of and experience with computer systems and technologies, strong problem solving and analysis skills, and good interpersonal skills. Employees in this field usually need several years of work-related experience or on-the-job training. Continuous study is usually necessary to keep skills up to date, because of rapid technological advances in the computer field.

Where Do They Work?

Nearly half of all the computer engineers in Connecticut work in the business services industry. The second largest number of computer engineers is employed in the engineering and management services industry, followed by the transportation equipment manufacturing industry. Nearly half of the computer engineers work in the Capital region.

Earnings

National median annual wages for computer engineers were $61,910 in 1998-99. In Connecticut, the Stamford Labor Market Area's median annual wage was the highest at $79,150 during the 1998-99 period, while the median was $65,280 for the State (see chart). On the other hand, computer engineers in the Danbury area were paid the lowest median wage of $53,680.

On an industry level, computer engineers in the chemicals and allied products sector were paid the highest median annual wage of $75,230. The lowest wage rate was in the insurance agents and brokers sector at $49,940.

Employment Outlook

In 1998, 299,300 computer engineers were employed in the United States. It is projected that by the year 2008 employment in this occupation will grow by 108 percent, an increase of 322,800 positions, and 81,000 job openings are expected annually.

In Connecticut, computer engineers will be among the fastest growing occupations, with employment projected to rise by 63 percent in this field, increasing from 5,200 in 1998 to 8,500 by 2008. The Capital region will see the most growth in this occupation, with about 130 job openings expected to be available each year.

Complete current data on computer engineers or other occupations in Connecticut are available by visiting http://www.ctdol.state.ct.us/lmidata.htm, or by contacting the Connecticut Department of Labor's labor market information unit at (860) 263-6275.

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Industry Clusters
Access 2001 Winners Named

A new report on the economic impact of Bradley International Airport finds that the Airport generates $2.5 billion annually for the State's economy. Last year, the Industry Cluster's Transportation Advisory Board reviewed Bradley's operations to determine what steps could be taken to improve Bradley's competitiveness. Recommendations of Schipol Project Consult and Michael Gallis were made to the Governor's Council for Economic Competitiveness and Technology. The latest report, prepared for the Department of Transportation, which manages the airport, was done by Wilbur Smith Associates of South Carolina and based in part on surveys of passengers, businesses, and Airport administration.

The report said that in addition to its multi-billion dollar impact, the Airport is responsible for $700 million in wages paid to 26,000 direct and indirect employees. Bradley's direct impacts were measured at $334 million. The Airport's indirect impact, which reflects expenditures by visitors, travel agencies, and other businesses tied to Bradley were found to be $885 million. Multiplier impacts, such as visitor spending at local restaurants, were measured at $1.2 billion. The report notes that with 300 daily nonstop flights to 41 destinations, Bradley has become one of the fastest-growing airports in the nation and 7 million passengers are expected to utilize the Airport in 2000.

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Housing Update
November 2000 Housing Permit Activity

Commissioner James F. Abromaitis of the Connecticut Department of Economic and Community Development announced that Connecticut communities authorized 863 new housing units in November 2000, a 15.6 percent decrease compared to November of 1999 when 1,023 units were authorized.

The Department further indicated that the 863 units permitted in November 2000 represent an increase of 11.2 percent from the 776 units permitted in October 2000. The year-to-date permits are down 14.1 percent, from 10,146 through November 1999, to 8,713 through November 2000.

In order to be consistent with other economic indicators from Department of Labor, we are now reporting new housing permits by Labor Market Area. The permit data by counties is still available upon request.

Hartford Labor Market Area documented the largest number of new authorized units in November with 310. New Haven Labor Market Area followed with 190 units. Madison led all Connecticut communities with 108 units, followed by Danbury with 47 and Southington with 25.

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