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Lack of Jobs, Recession Stagnates County Economy

FAIRFIELD COUNTY, Conn. – Job gains made earlier in the year in Connecticut have slowed again and could signal a longer period of economic stagnation – even in affluent Fairfield County – say business leaders and economists.

Those fears are backed up by the numbers released Thursday by the Connecticut Department of Labor, which shows that although the state gained 2,900 jobs in July, it lost 8,600 jobs in August.

The state's unemployment rate declined slightly in August to 9 percent, just less than the national 9.1 average. But the state's Bureau of Labor Statistics indicated there was "an unprecedented July to August loss of jobs in Connecticut's local government sector."

Of the 10 major industry sectors, only two showed gains, according to Labor Statistics Supervisor Salvatore DiPillo. "Some industry sectors that showed job gains in the first quarter of the year have subsequently lost jobs," DiPillo said in a statement. "Unfortunately, as is the case nationally, job creation in Connecticut appears to have lost momentum."

He said the state's construction industry, which began losing jobs in mid-2007 – before most other sectors – lost 20,500, or 30 percent of its jobs between that time and December 2010. "There were gains in early 2011, but in recent months employment in this sector has stagnated," DiPillo said.

That's not a good sign for economic recovery, say Fairfield County business leaders, who are hoping President Obama's $450 billion American Jobs Act will help reverse a recession and debilitating unemployment rate that has hovered at about 9 percent for three years.

"It's been a terrible recession, and very slow business growth has occurred," said Joe McGee, vice president for public policy of the Business Council of Fairfield County.

State economists, as well as county business leaders say Obama's proposal — made in an address to the nation last week — could "stimulate the long-term economy" if approved.

McGee said several key parts of Obama's proposal would help stimulate the economy and create jobs, especially in the construction industry.

"The tax credit for employers to hire is a very good idea, and the whole issue of infrastructure investment is vital. Connecticut needs to double its $40 million investment a year over 20 years just to catch up," he said. "The president's plan would help rebuild our transportation system — railways, roads and bridges and put people back to work, particularly in the construction industry that has taken a huge hit."

McGee called on politicians to pass the measure. "Closing corporate tax loopholes and lowering our corporate taxes, one of the highest in the world, would also help," he said.

Floyd Lapp, president of the Southwestern Regional Planning Agency in Stamford, also said the best way to create jobs in Fairfield County would be to invest in transportation infrastructure.

Lapp said he also supports tax changes for the residents and businesses in the agency's region, which contributes 30 percent to 40 percent of the state's income tax revenue from its eight towns: Greenwich, Stamford, Darien, Norwalk, Westport, Weston, Wilton and New Canaan.

"One of the biggest problems we have in generating jobs and leading the world again is our serous under-investment in transportation," Lapp said. "We should be spending $225 billion a year across the country in each of the next 50 years on infrastructure, according to a major study. Unfortunately, we're probably only looking at spending about $40 billion a year over the next six years."

Lapp said the same study indicated that for every billion dollars spent in transportation, 47,000 new jobs are created.

"If you go back to the [Franklin D.] Roosevelt era in the 1930s, that's exactly what was done. And again during the [Dwight] Eisenhower years, he launched the Interstate Highway and Defense Act of 1956 that put $2 billion out there for 13 years, which at the time was an enormous monetary investment and largest public works program the country ever did."

Stanley McMillen, managing economist for the Connecticut Department of Economic and Community Development, said the president's multi-layered proposal to create jobs, invest in infrastructure, save teaching jobs, extend unemployment benefits and close tax loopholes, can work in Fairfield County and across the state.

But, he added, there are too many "unpredictable factors" to know when the stagnant economy and high unemployment rate will improve here. "So many things are beyond our control–such as the economic slowdown in China, possible collapse of the Euro in Europe and how much of the president's proposal will be approved by Congress," said McMillen. "But I can see (economic) stagnation in Connecticut for up to the next 18 months," he said.

"The 10 million Americans and more than 100,000 people in Connecticut out of work is just the tip of the iceberg," McMillen said. "People aren't going on as many vacations, or spending money to make improvements to their homes ... not while desperately trying to keep from losing their homes."

To reach Richard Weizel, email him at rweizel@mainstreetconnect.us .

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