Connecticut Braces For A Recession

HARTFORD (AP) — A group of professors on Monday offered an abbreviated economics lesson that included two R’s: recession and regionalism.

Connecticut, like the rest of the United States, faces an economic downturn this year. Adding to problems that may not afflict other states is a Byzantine regional system of government that hampers local efforts to manage growth, economists and others said.

Gambling in southeastern Connecticut’s two casinos helped save the state’s economy from significant losses, replacing the region’s reliance on military contracts.

“We’re looking at the inevitability of a slowdown in this state and possibly of a recession,” said Steve Lanza, an economist at the University of Connecticut.

The Connecticut Economy, UConn’s quarterly review released at the Capitol, provides grim statistics showing a slowdown in the nearly 10-year economic expansion.

Job growth is sputtering, consumer confidence is falling, stock portfolios are shrinking, and energy prices are taking a larger bite out of state residents’ incomes, the report said.

At the same time, Connecticut’s jury-rigged, 18th Century system of 169 city and town governments is not equipped to manage growth, said Terry Tondro, a UConn law professor.

“Boundaries are our problem,” he said. “People really believe in these boundaries and I think that is the problem.”

Artificial political lines on a map hinder efforts to recognize mutual interests and solutions to regional problems, Mr Tondro said. He cited airports that span municipal lines and malls outside cities that draw customers and revenue from downtown areas.

Connecticut’s economy is not in the tank. But its gain of 19,300 jobs between the end of 1999 and 2000 – a strong spurt – is 17 percent less than the average gain of 23,300 jobs in the first nine months of 2000. And it’s 32 percent below the 28,300 jobs created in 1998.

Most job growth was in service industries that produced nearly all the jobs in eastern Connecticut’s gambling casinos.

“When the economy goes bad, people try to make up for it at the tables,” said Jim Moor, Jr, editor of The Connecticut Economy.

Hartford’s insurance industry also is in jeopardy as financial companies’ stock portfolios shrivel.

Southwest Connecticut, which also is tied to the financial muscle of New York, faces similar troubles on Wall Street.

A result is dropping consumer confidence. Among Connecticut residents surveyed, 62 percent believe it is at least fairly likely a recession will occur in the next 12 months, the report said. One-fifth of those surveyed say a recession is extremely likely.

Better economic news came from southeastern Connecticut’s gambling casinos, which helped push the number of unemployed down by nearly 42 percent in the final three months of 2000.

If a recession occurs, it will be the first since the Foxwoods casino opened in 1992.

Economists avoided predicting whether gambling would suffer. “But Foxwoods did, after all, take off like a shot while New England, and especially Connecticut, were still mired in the economic pit” of the early 1990s, the report said.