Region's jobs picture brightens

The Norwich-New London area, hit by a series of economic problems that have stalled home building, deflated real estate values and ballooned the unemployment rate over the past few years, could see a little relief by the first half of 2013, according to a report released Monday by the University of Connecticut.

The fall issue of UConn's quarterly economic report The Connecticut Economy projects that the region could add 1,600 jobs by the middle of next year, a reversal of previous dire predictions for the Norwich-New London area.

Still, second-quarter job losses totaling 2,200 in the region were sobering, accounting for more than half the 4,000 losses that occurred statewide, according to the report. Job losses in the most recent period were significantly larger than any gains expected over the next year.

"There's not going to be any kind of miraculous recovery," Steven P. Lanza, executive editor of The Connecticut Economy, said in a phone interview Monday. "All we can say is that maybe the worst is behind the region."

Actually, UConn projections see further erosion in the region's job numbers in the third quarter that ends this month, but economists expect things to turn around late this year. That's an improvement from projections in the summer edition of The Connecticut Economy, which indicated the region's employment losses would continue to mount well into next year.

Lanza said the rosier future being projected is the result of recent job gains made locally in the medical care and education fields, combined with a stabilization in manufacturing and an uptick in the number of hours being worked.

"All models point to an incipient recovery," he said.

The ups and downs of the regional and state economies make it difficult to forecast labor gains, the report noted, but a slow recovery is expected, something under 12,000 jobs statewide over the next year.

"At the current rate it will take nearly six more years to recover all the jobs lost in the last recession," Lanza said in the report, which was written before the Federal Reserve Board decided to pump money into the economy by purchasing $40 billion a month in mortgage-backed securities.

Lanza said the Federal Reserve's move could help the housing market. But he said other obstacles on the horizon - including a possible 2 percent loss in gross domestic product if Congress cannot work out an agreement to avoid hitting the "fiscal cliff" later this year that would automatically cut spending and raise taxes - weigh on the economy.

"You cut 2 percent off (the GDP), and you've just bought yourself a recession," Lanza said.

The report noted that the second-quarter "jobs blip" may have been exacerbated by unseasonably warm weather in the first quarter that spurred early hiring in areas such as retail and construction. The second quarter suffered partly because hiring in seasonal jobs got started earlier than usual, Lanza said.

Projections statewide show the unemployment rate gradually falling over the next year, but the figure is expected to remain higher in eastern Connecticut than for the other three major labor market areas of Hartford, New Haven and Bridgeport-Stamford, the report said. The region's unemployment rate is projected to stay at or above 8 percent over the next year.

"We haven't seen the job recovery there that we've seen in the other parts of the state," Lanza said.

l.howard@theday.com