Q2 2012 Fairfield County, Connecticut Commercial Real Estate Economy

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Q2 2012 Fairfield County, Connecticut Commercial Real Estate Economy

The Fairfield County economy is barely improving, and according to an August report from the Connecticut Center of Economic Analysis (CCEA), the statewide recession was even worse than had been believed at the time. “Ultimately BLS’s revisions, compounded by international weakness, reveal that Connecticut has an even steeper hill to climb than we had thought,” according to this source. “Given that there are fewer jobs in Connecticut now than in 1988—a generation without job creation—and the resulting demographic trajectory holds serious threats to the state’s long-term fiscal health, the new understanding of the depths from which we are recovering re-enforces the emphasis in the last Outlook of the absolute necessity for Connecticut to pursue aggressive policies and sustained investments to accelerate recovery and job creation.”

According to annual average Current Employment Survey (CES) data from the U.S. Bureau of Labor Statistics (BLS), total non-farm payroll employment for the Bridgeport/Stamford/Norwalk area and the smaller Danbury Metropolitan Statistical Area (MSA) combined increased just 0.9% (4,000) from July 2011 to July 2012. (In New England, metro area boundaries need not correspond with county boundaries). The Bridgeport/Stamford/Norwalk area gained just 3,100 jobs (0.8%) during the period, while the Danbury MSA gained 900 (1.4%). Household-based data from the BLS on the number of employed residents of Fairfield County, including the self-employed and commuters to Manhattan and elsewhere also show very modest gains. This figure was up by 5,560 (1.2%) year-over-year in June, with the labor force up by 2,580 (0.5%) as well.

Fairfield County has several advantages compared with the rest of Connecticut. Thanks to the New Haven line of MetroNorth commuter railroad, it is more closely linked to New York City, which has recovered all the jobs lost during the recession, than the rest of the state. Because Connecticut had no state income tax on employment until 1991 Fairfield County was long been a magnet for the most affluent Manhattan workers, with a household average income according to Moody’s Economy.com that is 67.8% higher than the national average.

Eventually top executives, particularly those in the Financial Activities sector started moving corporate headquarters to the county to reduce the length of their commute. The Great Recession hit this sector hard, and in the Bridgeport/Stamford/Norwalk area, where most large headquarters and financial firms are located, July 2012 employment therein is down 1,500 (3.5%) from July 2011 and 5,000 (10.8%) from July 2007. The Professional and Business Services sector which includes headquarters, is down 600 jobs (0.9%) from a year earlier and 3,500 (5.0%) over five years. The impact of losses in these sectors is magnified by their high pay levels. The Manufacturing sector, once a tech-driven powerhouse in places such as Bridgeport and still providing nearly as many jobs as Financial Activities, was down another 400 jobs (1.1%) in the Bridgeport/Stamford/Norwalk area year-over-year in July.

With less money coming in, the local consumer-driven economy remains weak. For the Bridgeport/Stamford/Norwalk and Danbury areas combined, Retail Trade employment is up by just 1,500 jobs (2.6%) year-over-year in July, and Leisure and Hospitality is down 300 (0.7%). Moody’s Economy.com reports second quarter 2012 Fairfield County household average income was essentially unchanged from a year earlier and down significantly from year-end 2007, and the population is rising just 0.3% (about 2,600) per year. One bright spot is an increase of 1,200 jobs (10.5%) in Construction and related sectors in the Bridgeport/Stamford/Norwalk area. According to the CCEA “Connecticut housing permits recovered strongly during the first and second quarters of this year, particularly encouraging given the nation’s leading rate of decline in housing prices” but the 2012 gains “come after the grueling decline in the number of units permitted over the previous six years, a contraction that predated the recession, and falling values in all but one of those years.”