Archive for October, 2009

Worcester T&G: Business expo opens: Economist Says Nation Faces Tough Recovery

Friday, October 30th, 2009

From the Worcester Telegram and Gazette: WORCESTER — Economist and Bloomberg TV analyst Richard Yamarone said the nation is recovering from its economic downturn but remains constrained by a poor job market…

Mr. Yamarone told his audience this morning, members of the Worcester Regional Chamber of Commerce’s Breakfast Club, he expects a recovery that, if plotted on a chart, would resemble the mathematics symbol for a square root: a sharp drop, a sharp rise and then a prolonged flat line.

The economy “falls, it rises and it comes back just barely into positive territory, where it levels off for a period of time,” he said.

A significant problem for the economy, Mr. Yamarone said, is the continuing loss of jobs.

“The more realistic view is we’re not creating jobs,” he said. “We’re still hemorrhaging jobs at a rate of 250,000 jobs a month, and the bad thing is we’re still hemorrhaging jobs 21 months into the recession.”

Hartford Business Journal: Inaction Leads To Over-Reaction

Monday, October 26th, 2009

The following opinion piece appeared in this week’s Hartford Business Journal:
Inaction Leads To Over-Reaction
Paul Moran

Hopes must have been high earlier this year among members of a group of business leaders from across Connecticut when they put forth a blueprint for helping to end the state’s budget stalemate.

The group offered a comprehensive plan calling for reforms and other measures to get the state’s budget in order and stop the exodus of business from Connecticut. Unfortunately, according to a recent column in the Hartford Business Journal, state leaders had no interest in what the group had to offer. We commend the Metro Hartford Alliance and its membership for its leadership in taking the initiative, and share their frustration at the fate of the proposal.

This lack of response is symptomatic of what has been happening here for decades regarding business development in Connecticut: nothing. Usually there is at least lip service paid to the business community, but this time only a deaf ear was offered.

Today, there is no plan in Connecticut to move the state forward in creating and maintaining jobs and attracting business to the state. Several attempts have been made to fashion such a plan, but ultimately they have never come to fruition. Rather than see things in the long term, politicians are interested in immediate gratification — scrambling from one crisis to another, trying to appear to play the hero, but ending up with nothing to show for their grandstanding.

Of particular note is the grandstanding of Attorney General Blumenthal. In October, the Department of Public Utility Control (DPUC), at the behest of Blumenthal banned Connecticut Natural Gas and Southern Connecticut Gas, two major, longstanding companies, from conducting business as they saw fit. Given the economic pressures they are under, those companies felt compelled to let a small amount of their work force go — an unpleasant and all too familiar exercise today in Connecticut.

Earlier in the summer, Blumnethal tried to interfere with AT&T and its job restructuring plan. To its credit, the DPUC stood up to Blumenthal at that time and declared accusation unwarranted. And again, just last week, Blumenthal issued a press release written in collaboration with union officials who are currently in negotiations with AT&T, regarding job restructuring within the company. The release contained erroneous information about the company’s business affairs, although Blumenthal made no mention of that information in a subsequent press release.

The unhelpful, even antagonistic attitude that political leaders exhibit towards business in Connecticut needs to change. Instead of dialogue, there is demonizing. Instead of conversation, there is name calling. Instead of progressive and thoughtful action or promotion of new and innovative concepts, there is inaction. What many in government fail to realize is that business is the engine of job creation and growth that benefits all of us, and therefore warrants their support.

Had there been such a long-term economic plan from our political leaders, perhaps the movement of jobs to other states and countries by Pratt & Whitney might not have happened. Perhaps if a plan had been in place, the small manufacturers of Connecticut would not have to tell lifelong employees that they no longer had a job. Perhaps if politicians had been involved in a dialogue with all affected parties, today’s global recession might have been mitigated here. But there is no plan. There is no leadership.
We urge the Metro Hartford Alliance and all business leaders to renew their efforts to re-engage the state’s policy makers in meaningful and results-driven dialogue. In the absence of state leadership, we would urge that all state officials re-engage with business leaders to fashion such a plan. It will be hard work, no question. But the alternative is continued inaction that leads to over reaction.

Paul Moran is the executive director of Jobs for New England Now, a coalition of citizens, businesses, pro-business groups and nonprofit organizations that encourages economic growth and prosperity for greater New England.

Tax changes may be on R.I. horizon

Friday, October 23rd, 2009

From today’s Providence Journal: Governor Carcieri’s administration director, Gary Sasse, gave a roomful of state senators a list of “two to three things” to do over the next few months as the state tries to climb out of its financial abyss. The first was: “pray.

The next was: “Need positive attitude. No naysayers,” according to the notes kept by one of the senators at the meeting last week.

The third was a variation on a key piece of an ambitious proposal to solve deficit-racked California’s budget crisis: lower the tax burden on the wealthy, repeal sales taxes and replace the corporate profits tax with a new levy pegged to business revenues.

CT business failures at an all-time high

Thursday, October 22nd, 2009

From Connecticut’s NPR station: The numbers of businesses shutting their doors in Connecticut is at an all-time high. New figures from the Secretary of the State’s office show that nine-and-a-half thousand companies have failed so far this year. WNPR’s Harriet Jones reports.

Businesses that dissolve must file papers with the Secretary of the State’s office, and the latest figures show a record number of shut-downs for the third quarter. The 2,600 businesses that failed represent a nearly seven percent increase in shut downs from the same quarter last year. But there’s also evidence of turnover, with business starts on the increase, up almost two-and-a-half percent on the third quarter of 2008.

Check out the link above for the full story!

Boston Fed reports broad economic decline

Wednesday, October 21st, 2009

From the Boston Business Journal: Business leaders from New England expect a “slow recovery … in 2010,” a Federal Reserve Bank of Boston report released Wednesday states.

Among sectors showing “positive signs” is residential real estate, the researchers wrote in the Fed’s eight-times-a-year summary of economic conditions, commonly known as the Beige Book.

Among the report’s highlights, broken down by sector for New England:

• “Wage increases are very modest or zero; large layoffs appear to have ended, but hiring remains very limited.”

• “Retailers … report mixed sales results for the early fall months, with year-over-year percentage changes in same-store sales ranging from negative to positive mid single-digits.”

Retailers whose sales have been soft are worried about the potential of winter heating costs to further depress demand, the researchers wrote.

• “Tourism activity in Boston is weak, although the rate of decline has slowed,” the researchers wrote. “Business travel is especially soft, and one contact worries that decreased corporate travel and spending will become ‘the new norm.’ ”

6,600 Jobs Lost In Connecticut In September

Wednesday, October 21st, 2009

From today’s Hartford Courant: With stocks in a solid bull market, manufacturers seeing more orders, corporate earnings on the upswing and more houses selling, there was hope this fall that Connecticut’s deep job losses were easing.

The state had posted a couple of months of smaller declines, and even an uptick, in May.

But optimism was dashed Tuesday with a report showing the state’s employers shed 6,600 jobs in September, and the unemployment rate leaped to 8.4 percent from 8.1 percent. Steep losses in education, administrative work, retail trade, transportation and utilities paced a month that hearkened back to the huge declines of last winter.

If the new numbers weren’t bad enough, job losses for August, previously reported at 3,700, were revised up to 4,800.

“This is a swift kick in the pants,” said economist Donald L. Klepper-Smith of DataCore Partners Inc. in New Haven, chairman of the governor’s economic advisory council. He was among the forecasters expecting fewer job losses.

Personal Bankruptcy Filings Skyrocket In Connecticut

Tuesday, October 20th, 2009

Personal bankruptcy filings in Connecticut skyrocketed 44 percent in the third quarter compared with a year earlier as job losses and salary cuts squeezed household budgets burdened by high credit card bills, a new report showed Monday.

There were 2,569 personal bankruptcy filings in the state in the three months ending Sept. 30, compared with 1,773 for the same period in 2008, according to the report from The Warren Group.

“It all boils down to consumers that are stretched too thin,” said Donald L. Klepper-Smith, an economist at DataCore Partners Inc. in New Haven. “It’s the basic lack of income in an economic downturn.”

Connecticut has lost 79,100 jobs since employment peaked in March 2008. When the state releases its September employment report today, Klepper-Smith said he expects that the state will have lost 1,500 to 2,500 additional jobs.

Many economists now believe that the state will lose closer to the high end of 80,000 to 100,000 jobs in the fallout of the recession.

And when employers do start expanding payrolls again, they will do so cautiously, so relief might not come quickly enough for many facing bankruptcy, economists say.

Many Connecticut residents “are struggling to pay their bills and have accumulated tremendous debt by relying on credit cards to pay for basic living expenses,” said Timothy M. Warren, chief executive of The Warren Group.

Chapter 7 bankruptcy filings — which wipe out all but mortgage debt — totaled 2,275 in the third quarter, compared with 1,384 a year ago, a 64 percent jump.

In Connecticut and throughout the nation, Chapter 7 filings spiked in 2005 before a new federal law went into effect that made it tougher and more expensive for consumers to file for Chapter 7 protection.

Chapter 13 filings, which require a repayment plan, fell by 24 percent, to 294 in the recent quarter, from 389 in the same period in 2008.

The shift to Chapter 7 is likely an attempt by consumers to hang onto their homes, said Joel Grafstein, a bankruptcy lawyer in Farmington.

“If there’s a finite amount of money coming in and people are paying the mortgage first, and the car second, there isn’t a lot left over,” Grafstein said. “They have a better chance of staying in their homes.”

Through the first nine months of 2009, personal bankruptcies rose 22 percent, to 7,177, from 5,583 for the same period a year ago. Chapter 7 filings rose 51 percent in the period to a four-year high of 6,289, up from 4,176 in 2008.

Rhode Island Jobless rate hits 13%

Friday, October 16th, 2009

From this morning’s Providence Journal: Rhode Island’s unemployment rate has hit a new high, fulfilling experts’ predictions that the state’s job market will get worse before it gets any better.

The jobless rate reached 13 percent in September, up from 12.8 percent in August, according to a report issued Friday by the state Department of Labor and Training. The latest stop on a seemingly inexorable climb that started three years ago set yet another record since the federal government began tracking the number of unemployed workers in 1976.

Economists who once projected that the rate would hit its apex this year now believe it will continue to rise through the end of 2010.

“In the spring, our forecast was very optimistic,” said Edinaldo Tebaldi, assistant professor of economics at Bryant University. “It turned out to be wrong.”

Mass. unemployment hits highest rate since 1976

Thursday, October 15th, 2009

Heartbreaking news today from the Boston Globe: The Massachusetts unemployment rate last month rose to its highest level since the 1970s as employers cut more than 9,000 jobs and work remains scarce.

The jobless rate rose to 9.3 percent in September from 9.1 percent in August, exceeding the percent peak rate of 9.1 percent reached during the deep New England recession of the early 1990s, the Massachusetts Executive Office of Labor and Workforce Development said in a press release.

It is the highest rate since 1976, when the state was recovering from a recession spurred by soaring energy prices following the Arab oil embargo and the collapse of traditional manufacturing industries.

Hitting Bottom: When will the jobs return?

Wednesday, October 14th, 2009

Interesting read from today’s Hartford Advocate: Have we hit bottom? That’s the question many are asking, especially among the nearly 80,000 people who have lost their jobs in Connecticut in the past year. Another 20,000 are expected to join the ranks of the unemployed before things turn around in June. And bankruptcy filings are on the rise.

“We’re probably close to the bottom now as far as job losses are concerned,” says Joe Brennan, senior vice president of the Connecticut Business and Industry Association. “There’s no accurate way to measure that when you’re in the middle of it, but anecdotally talking to members [of the CBIA] they feel they’re at the bottom.”

… What is being done to bring more jobs into the state? Not much, according to Brennan.

“Candidly, during the legislative session the response was tepid at best,” he said. “We talked, and others talked, going into the session about the fact that economic recovery needed to be the priority, but the budget obviously dominated the legislative session. Very little attention was given to economic growth.”

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