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2011 may be remembered as the year that disappointed many of our economic hopes. The recovery was supposed to pick up steam and give us significant job growth, but that wasn’t the way it played out. WNPR’s Harriet Jones has been talking to a panel of economists about the year that’s just ending and looking ahead into 2012.
Certainty was hard to come by in 2011, but Alissa DeJonge, chief economist for the Connecticut Economic Resource Center says at least this much definitively.
“It’s been volatile, that’s for sure – it’s been hard to predict anything.”
Economists like DeJonge began the year hoping for the U.S. to return to a normal growth rate of 3% or above. But in fact the country achieved only 2% by the third quarter. Steven Lanza of the University of Connecticut:
“What that means for Connecticut – that’s translated into barely perceptible job growth over the course of this year. We’ve gained on average just 800 jobs per quarter, which is 2,400 in the year – not very much to write home about.”
He says that anemic job growth can be traced back in part to the belt tightening among state and municipal governments.
“The private sector has actually done okay. By itself it’s starting to come back. We haven’t gotten a whole lot of support from the public sector over the course of this year.”
Many economists agreed that the winding down of the federal government’s stimulus program had a marked effect on the trajectory of the recovery. Dan Kennedy of the Connecticut Department of Labor says the very public disagreement about the debt ceiling also didn’t help.
“This was the first time that politicians in the United States had ever seriously talked about not raising the debt ceiling. And so that I knew was going to do a lot of damage to the economy and to the financial system in the world.”
Looking ahead to 2012, Kennedy says the fact that it’s an election year, and neither party wants to give ground, may not bode well.
“I think the continued political gridlock is going to be damaging. I think it’s going to keep us at best in this slow holding pattern where we’re not showing much growth.”
But CERC’s Alissa DeJonge says the state of Connecticut will have some bright spots.
“The real stars, the industry stars, are going to be the healthcare sector continuing its steady growth, and then also this rebound in the manufacturing sector and that’ll be new for 2012, because we haven’t seen that in a number of years.”
On the other hand, some of our traditional go-to industries may well see continued weakness.
“We rely more heavily on financial services and those services actually have not been doing as well over the past year, so we might see that carry through into some slower growth for Connecticut.”
One of the biggest unknowns in predicting a pick up in the economy remains the fate of housing. While Connecticut did see a slight uptick in housing starts late in the year, prices have not yet started to recover. Dan Kennedy at the Labor Department says that continued weakness is significant.
“If and when the housing market comes back, then that starts picking up again, because that in and of itself has a lot of multipliers that drive the economy.”
With continued caution the watchword in most economists’ forecasts, the state and the nation will hope that something emerges in 2012 to shake the economy out of its near stagnation.
For WNPR, I'm Harriet Jones.