Employment is the factor that drives the economy, and based on the latest labor and housing statistics, it will be some time before there is a long-term rebound, a panel of experts told attendees of a Business Council of Fairfield County breakfast Friday at the Sheraton Stamford Hotel.
“We’re very well aware that economic growth has been muddling along. We’ll get more of the same in 2012. It makes the economy vulnerable to outside shocks,” said Anika Khan, vice president and economist with Wells Fargo bank in Charlotte, N.C.
The outlook remains guarded, despite a report Friday from the U.S. Department of Labor that the unemployment rate dropped to 8.6 percent in November from 9 percent the month prior.
Khan was one of a three-person panel that also included Peter Helie, chairman and CEO of Prudential Connecticut Realty, and Fred Carstensen, economic professor and director of the Connecticut Center for Economic Analysis at the University of Connecticut.
“The consumer is still being extremely cautious,” Khan said, adding that economic growth has suffered as a result. “Consumer spending is not going to add a huge amount to the GDP in coming years.”
Concerns about keeping a job for some, and for others how long they will be unemployed, are major contributors as 5.9 million Americans have been unemployed more than six months, she said.
Carstensen questioned the premise of providing tax breaks to create jobs.
“The Bush tax cuts were followed by the lowest level of business investment since World War II,” he said. “Tax cuts do not stimulate economic growth.
Invest infrastructure and education, and that makes you competitive.”
Unemployment has risen since tax cuts were enacted a decade ago under the administration of President George W. Bush, said a member of the audience, John Stoddard, vice president of corporate real estate brokerage at Jones Lang LaSalle in Stamford.
“The political rhetoric tells us that cutting taxes creates jobs,” he said, but he questioned that premise.
The Obama administration’s job stimulus programs have created 3 million jobs, but that figure has been offset by state and federal government job losses, Carstensen said, noting that Connecticut has not seen net job growth in 25 years — the worst record in the nation.
High-paying jobs leaving the state have been replaced by lower paying jobs, many in leisure and hospitality, he said.
A recent bright spot, Carstensen said, is the state’s decision to reinforce its commitment to jobs in biosciences by spending $291 million over the next 10 years to attract Jackson Laboratory to the University of Connecticut Health Center campus in Farmington.
It has been estimated that it could create 7,400 jobs in the next 20 years.
Until more good-paying jobs like those arrive in Connecticut, it will be a buyer’s market for house sales, Helie said.
“It’s going to take a long time for this residential market to turn around,” he said.
The median sales price in Fairfield County in 2011 is $497,000, compared with $481,000 in 2010, but sales are down 5.9 percent. The number of days a home is on the market before selling has increased from 147 in 2010 to 152 this year.
Many of the houses that Prudential Connecticut Realty sells now are short sales, when the home owner arranges with the lender to sell the property at a loss.
“Thirty to 50 percent of sales we handle are short sales,” Helie said, adding that now is the time to buy because interest rates are low. “In my 40 years, I’ve never seen interest rates as low as they are now. If houses are priced properly, we’re seeing multiple offers.”
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“We’re very well aware that economic growth has been muddling along. We’ll get more of the same in 2012. It makes the economy vulnerable to outside shocks,” said Anika Khan, vice president and economist with Wells Fargo bank in Charlotte, N.C.
The outlook remains guarded, despite a report Friday from the U.S. Department of Labor that the unemployment rate dropped to 8.6 percent in November from 9 percent the month prior.
Khan was one of a three-person panel that also included Peter Helie, chairman and CEO of Prudential Connecticut Realty, and Fred Carstensen, economic professor and director of the Connecticut Center for Economic Analysis at the University of Connecticut.
“The consumer is still being extremely cautious,” Khan said, adding that economic growth has suffered as a result. “Consumer spending is not going to add a huge amount to the GDP in coming years.”
Concerns about keeping a job for some, and for others how long they will be unemployed, are major contributors as 5.9 million Americans have been unemployed more than six months, she said.
Carstensen questioned the premise of providing tax breaks to create jobs.
“The Bush tax cuts were followed by the lowest level of business investment since World War II,” he said. “Tax cuts do not stimulate economic growth.
Invest infrastructure and education, and that makes you competitive.”
Unemployment has risen since tax cuts were enacted a decade ago under the administration of President George W. Bush, said a member of the audience, John Stoddard, vice president of corporate real estate brokerage at Jones Lang LaSalle in Stamford.
“The political rhetoric tells us that cutting taxes creates jobs,” he said, but he questioned that premise.
The Obama administration’s job stimulus programs have created 3 million jobs, but that figure has been offset by state and federal government job losses, Carstensen said, noting that Connecticut has not seen net job growth in 25 years — the worst record in the nation.
High-paying jobs leaving the state have been replaced by lower paying jobs, many in leisure and hospitality, he said.
A recent bright spot, Carstensen said, is the state’s decision to reinforce its commitment to jobs in biosciences by spending $291 million over the next 10 years to attract Jackson Laboratory to the University of Connecticut Health Center campus in Farmington.
It has been estimated that it could create 7,400 jobs in the next 20 years.
Until more good-paying jobs like those arrive in Connecticut, it will be a buyer’s market for house sales, Helie said.
“It’s going to take a long time for this residential market to turn around,” he said.
The median sales price in Fairfield County in 2011 is $497,000, compared with $481,000 in 2010, but sales are down 5.9 percent. The number of days a home is on the market before selling has increased from 147 in 2010 to 152 this year.
Many of the houses that Prudential Connecticut Realty sells now are short sales, when the home owner arranges with the lender to sell the property at a loss.
“Thirty to 50 percent of sales we handle are short sales,” Helie said, adding that now is the time to buy because interest rates are low. “In my 40 years, I’ve never seen interest rates as low as they are now. If houses are priced properly, we’re seeing multiple offers.”
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