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Like a clean slate of still unbroken New Year's resolutions, the year 2002
offers renewed hope for a resumption of "New Economy" trends including
a return to economic growth, increased output, and employment growth statewide
and nationally. The National Bureau of Economic Research, a business cycle
authority, announced in November that the U.S. had entered a recession in March
2001, ending a ten-year national economic expansion, the longest ever. It is
believed Connecticut's economy also slumped into a recession in 2001, but most
analysts expect the nation to recover as early as this year. Connecticut's
economy would then also return to positive growth.
Historical Patterns
Based on historical patterns, the average length of a recession is eleven
months. This suggests recovery could begin before the third quarter 2002. Yet
there remain some serious reservations about whether the unprecedented nature of
events since September 11th portend only an "average" recession.
Nevertheless, substantial groundwork for economic stabilization has already been
laid with a large dose of fiscal stimulus from federal tax cuts, resolution on
state and federal spending packages, and the monetary stimulus of eleven
interest rate cuts by the Federal Reserve Bank last year.
Sustained consumer confidence and the "rally-around-the-flag"
resolve reflected in the last DECD business climate survey will also help. The
index, which had fallen to 58.0 in the second quarter of 2001, and reached only
60.2 in the third quarter 2001, measured 69.0 in the business outlook for the
fourth quarter. While cautioning upon its initial release that it may not
reflect actual economic conditions, it does indicate a certain resolve or at
least hope among businesses to maintain strong performance in the months ahead.
Risks and Hopes
Among negatives, consecutive year-end declines put nonfarm employment down
0.8 percent, the manufacturing production index down 6.4 percent, housing down
1.1 percent year-to-date, retail sales down 2.6 percent, business starts down
11.1 percent, state tax revenues down 3.8 percent, and New England consumer
confidence down 39.0 percent. Such widespread trends seem likely to convince
even the most optimistic analyst that we have not avoided recession. Yet, an
October drop in the unemployment rate from 3.6 to 3.2 percent, continued strong
hourly earnings up 3.4 percent, forecasted personal income up 3.0 percent, and
merchandise exports up 11.7 percent are cause for hope.
Indeed, in November, the leading index of Connecticut employment, designed to
forecast activity around ten months in the future, was itself "pointing to
a possible recovery in the near future" [Digest, November 2001, p.
6]. The trend continued with the current release of the leading index when it
rose narrowly to 111.3 for October 2001 from 111.1 for September 2001 (see page
6 of this issue).
A Wider Measure
A comprehensive statewide measure of total final output is the Gross State
Product (GSP). It is a measure of the State's total final goods and services
produced. On this the forecasts are mixed. The Connecticut Center for Economic
Analysis (CCEA), in the Fall 2001 issue of The Connecticut Economy
(Volume 9, Number 4), noted recent GSP trends and considered
"optimistic" and "pessimistic" scenarios for 2002. In the
optimistic scenario, Connecticut's GSP grows 2.7 percent in 2001 and a slower,
but still positive, 1.5 percent in 2002. In the pessimistic scenario,
Connecticut grows 2.2 percent in 2001 and declines 0.6 percent in 2002. The
current Regional Economic Model, Inc. (REMI) control forecast puts Connecticut's
GSP (after making an adjustment for inflation) at $155 billion in 2001 and $158
billion in 2002. The latest New England Economic Project (NEEP) forecast puts
the GSP at $153 billion in 2001 and declining 0.7 percent to $152 billion in
2002.
Conclusion
As the tragic events of late 2001 unfolded, the widespread expectations were
that the fourth quarter U.S. inflation-adjusted real Gross Domestic Product
(GDP) would only confirm the recession. Two consecutive quarters of decline in
real GDP is a traditional indicator, but not a defined criterion of recession.
It was also the unanimous, if unfortunate, conclusion of all the NEEP
forecasters in late October that each of the New England states including
Connecticut had "tipped" into a "recession." Yet even among
experts presenting before Connecticut's own Economic Conference Board last
October 2, there seemed equal consensus that barring further terrorist
developments and some "visible victory" in the fight against
terrorism, recovery could come by mid-year 2002. Thus, with the resolve
reflected by the President and the American people in recent months, 2002 is a
year to keep the hope for a stronger economy.
Preparatory activities and analyses have begun in the Department of Labor's
Office of Research in preparation for the annual benchmark revision of
Connecticut nonfarm employment estimates. Revisions to the currently published
nonfarm employment series will replace the estimates from April 2000 through
March 2001 and will be released in March of 2002. The benchmark revision process
represents a once-a-year re-anchoring of sample-based employment estimates to
full population counts which become available later through unemployment
insurance (UI) tax reports filed by nearly all employers with the Department of
Labor.
Preliminary calculations indicate that Connecticut nonfarm employment
(unadjusted) will be revised downward by approximately 7,000 to 13,000 jobs, or
0.4 percent to 0.7 percent. The total number of State jobs is close to 1.7
million. This is an early and rough benchmark revision assessment that could
change as more UI tax records are received and processed. Ongoing administrative
editing of the UI tax data remains as the most significant determinant of the
extent of the final employment revisions. There are almost 110,000 worksites in
Connecticut, with 3,500-4,000 included in the monthly payroll survey at
estimation, so revisions are inevitable. Nevertheless, the monthly sample-based
estimates are key to identifying important economic trends on a timely basis.
Connecticut's Employment Turns
The currently published employment series shows an abrupt flattening of the
rate of employment growth starting July 2000. Actually, seasonally adjusted
nonfarm employment for the State declined 1,900 positions from July 2000
(1,699,400 jobs) to December 2000 (1,697,500 jobs). Business services
employment, which includes temporary help, computer services, and advertising,
peaked in the fourth quarter. The first quarter of 2001 showed further job
growth deceleration and second quarter employment was no better as a major
healthcare strike confounded May data.
Job loss trends began to accelerate and become more apparent at the end of
the second quarter of 2001. Rapid and preemptive interest rate reductions may
have served to prop up economic activity levels through the second quarter, as
slightly negative linear trends developed in advance of the increased job cuts
that began after June 2001. Connecticut has posted seasonally adjusted job
losses every month since June 2001 for a total decline of 18,100 jobs between
June and November 2001. Some of the worst job losses do appear to be over at
this point, however. The warmer than usual weather is helping.
The September 11th events, which may be viewed as acts of economic warfare,
have in some ways added a clearer view to the State's employment
backdrop. Much of the discussion regarding the State's economy has been
focused on the 9-11 events and subsequent economic uncertainty, or the third
quarter 2001 employment drops, to identify slackening trends for the State. What
has been undetectable to date is that the current nonfarm employment series
already points to the Connecticut employment cycle peaking in the fourth quarter
of 2000. We used peak-trough analysis tools created by the U.S. Bureau of Labor
Statistics to identify employment cycles and phases according to criteria
similar to National Bureau of Economic Research (NBER) methods. Using these
peak-trough analysis tools, the current nonfarm job estimates show an employment
peak late in the fourth quarter of 2000 if not earlier, and this is expected to
be confirmed following the annual benchmark revisions. In addition, production
worker weekly hours, also from the payroll survey, peaked in the fourth quarter
of 2000.
Under this peak-trough criterion, a full cycle (peak to trough or trough to
peak) must be fifteen months long and phases must be an expansion or contraction
of at least five months. These definitions (15 and 5 months) plainly allow for
the establishment of trends to prevent calling a one-month drop in employment a
change in direction. The almost linear or slightly downward trend in employment
in Connecticut after July 2000 qualifies, with a full contracting phase (ending
the trough to peak cycle) being established five or so months later in the
fourth quarter of 2000. The events of 9-11 may have more firmly established
these downward trends, as some of the earlier data may have been inconclusive to
establish a turning point in the cycle. The recent action by the NBER to set the
onset of the national recession, based predominantly on U.S. nonfarm employment
trends, as March 2001, would still preserve Connecticut's distinction of leading
the nation into downturns.
It is interesting to note that using these criteria to look back to 1992's
employment trough, one can see the employment low point was reached sometime
immediately after Hurricane Andrew hit in August 1992. Connecticut's
employment recovery was slow after Hurricane Andrew, but it appears to have been
a turning or bottoming point when predictions at the time continued to be
negative. Hurricane Andrew was the largest insurance claim event prior to
September 11, 2001.
Connecticut's High Employment Correlation with the Nation
It is evident that Connecticut has diversified its employment base in the
last decade and is less exposed to specific industry downturns. In fact,
statistics show Connecticut has a very strong correlation coefficient with the
nation in terms of nonfarm employment (there is a correlation above +0.95 over
120 observations - ten years, where +1.00 is a perfect correlation). A strong
positive correlation is more a measure of association (strength) of relationship
between variables, and not causation. In other words, if the nation were going
into a recession, then most likely Connecticut would also go into recession as
an outcome of the strength of this association.
It would also be unrealistic to think that other states did not also
restructure their economies over the last decade, which provides ongoing
competition. However, it is good information to know that Connecticut has
already been in an employment downturn for potentially more than a year at this
point. Further, knowing that average periods of diminishing economic activity
usually range from 8 to 16 months may indicate a potential for recovery in the
foreseeable future, baring an unusually severe winter, a prolonged strike, or
another terrorist shock.
Conventional wisdom has been ingrained into economic analysis while virtually
unpredictable conditions have existed over the last few years. So, fully buying
into conventional analysis can at times do more detriment than good. Assorted
economic activity indexes have contributed to the lack of clarity in this
downturn, because separate indicators like housing and income have held up so
well, masking turning points. Nonfarm employment data, even with its revisions,
provides a broad, timely and relatively reliable coincident assessment of
Connecticut economic trends and turning points in State economic cycles.
Introduction
Occupations requiring moderate to long-term training or experience represent
19 percent of new jobs expected to be created in Connecticut through 2008.
Carpentry boasts the highest number of average annual openings for occupations
that require long-term on-the-job training.
What Do They Do?
Carpenters cut, fit, and assemble wood and other materials in the
construction of buildings, highways, bridges, docks, industrial plants, boats,
decks, and many other structures. While working on these projects, tasks may
include framing walls and partitions, putting in doors and windows, building
stairs, laying hardwood floors, installing kitchen cabinets, and finishing work.
Some carpenters may find their work specialized in one or two activities while
others will be expected to perform a wide variety of tasks. The ability to read
blueprints and comply with local building codes is an important part of most
carpentry projects. Outside the construction industry, carpenters perform a
variety of installation and maintenance work: install doors and windows, repair
furniture, move or install machinery. Carpentry is a physical job that uses
power tools and often involves outdoor work.
Employment
Nationally, nearly four out of five carpenters work for contractors who
build, remodel, or repair buildings and other structures. Most of the remainder
work for manufacturing firms, government agencies, wholesale and retail
establishments, or schools. Carpenters' duties vary by employer, with builders
increasingly using specialty trade contractors who, in turn, hire carpenters to
specialize in one or two activities. Carpenters can experience periods of
unemployment because of the cyclical nature of the construction industry. Some
carpenters alternate between working for a contractor and working on their own
as a contractor on small jobs. Nearly one-third of carpenters are self-employed.
Education & Training
Apprenticeships, informal on-the-job training, and vocational education
programs are used to prepare persons for the carpentry occupation.
Apprenticeship programs are recommended by most employers and are generally
three to four years in length, depending upon a student's skill and knowledge.
Along with hands-on training, apprenticeship classes include first aid, safety,
blueprint reading, freehand sketching and mathematics. While some on-the-job
training will give specialized training, broad-based training enables workers to
find work in commercial, residential, remodeling, and repair construction,
enabling them to find work during cyclical periods of unemployment. High school
education is desirable, especially with courses in general mathematics,
mechanical drawing, carpentry, and industrial technology. Manual dexterity,
eye-hand coordination, physical fitness and a good sense of balance are
important. In order to advance to supervisory positions, workers must be able to
accurately estimate the amount and cost of labor and materials to finish a
project.
Earnings
The national average annual wage for carpenters was $35,100 in 2000.
Connecticut's average annual wage was $37,855, with the Stamford LMA holding
the highest average at $43,380 (Table 1). The average entry-level wage for
carpenters was $28,145 in Connecticut; the middle 50 percent earned $31,395 -
$43,982. Since carpenters are involved in the entire construction process, they
often have opportunities to advance to supervisory positions.
Employment Outlook
Carpentry is the largest construction trade in the United States, with 1.1
million jobs in 1998. In Connecticut, there were 10,818 carpenters employed in
1998, and jobs are projected to grow 7.7 percent by 2008. Annually, 83 new
positions will be created. While this number is relatively small, carpentry will
need to replace 290 workers annually, for a total of 373 annual openings (See
table 2). Since there are no strict requirements for entry-level work, the
turnover is high as many people who enter the occupation decide the work is not
for them.
Paced by the Bioscience and the
High-technology clusters, Connecticut
was honored as a top state for
overall excellence in economic
development in the newly released
2001 Corporation for Enterprise
Development (CFED) Development
Report Card for the States. Along
with Colorado, Massachusetts,
Washington and Minnesota, Connecticut
earned straight A's. Moreover,
Connecticut was ranked first in
diversity of industry, and second in
several other key areas.
The report grades each state in three
main areas: Performance, Business
Vitality and Development Capacity, using
70 measures for evaluation. Among its
key findings, CFED says there is a very
strong relationship between states that
have a high presence in technologyintensive
firms and states with high
scores overall. Connecticut's score
improved over last year's when the state
received a B in Business Vitality and A's
in the other two broad indexes.
Connecticut's greatest improvement
was in the category of Business Vitality.
This encompasses competitiveness of
existing businesses, entrepreneurial
energy and structural diversity - the
variety of its economic base. Connecticut
is first nationally in diversified
industrial mix, what the report calls
"traded sector strength." In another
measure used to determine Business
Vitality, the CFED says of Connecticut,
"[The] State's export base is superb,
providing a solid engine of growth for
the state..."
For more information on CFED and
their report card, visit www.cfed.org.
Commissioner James F.
Abromaitis of the Connecticut
Department of Economic and
Community Development (DECD)
announced that Connecticut
communities authorized 706 new
housing units in November 2001,
an 18.2 percent decrease compared
to November of 2000 when
863 units were authorized.
The Department further indicated
that the 706 units permitted
in November 2001 represent a
decrease of 13.9 percent from the
820 units permitted in October
2001. The year-to-date permits
are down by 1.1 percent, from
8,713 through November 2000, to
8,618 through November 2001.
Vernon led all Connecticut
communities with 32 units,
followed by Danbury with 31 and
Trumbull with 24 units. The New
Haven Labor Market Area recorded
the biggest reduction in authorized
units in November (-132), an
almost 70 percent decrease compared
to a year ago. From a
county perspective, comparing
year-to-date data, Windham,
Hartford, Fairfield and Litchfield
counties surpassed last year's
levels while the remaining four
counties trailed last year's
performance.
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