t The damage inflicted on the state’s economy by COVID-19 could extend into next year, the Department of Labor says.

Post-virus quick rebound could put it back on track

The damage inflicted on Connecticut’s economy by COVID-19 could extend into next year, the state Department of Labor said in an outlook released Friday.

A prolonged national recession will severely harm the state, but a quick rebound could get the economy “back on track by the middle of next year,” associate economist Matthew Krzyzek wrote in the Connecticut Economic Digest.

In a “best case” possibility, the recession, although severe, “will be short and the national and Connecticut economies will bounce back early next year so that by next summer we’ll be back on track,” he said.

Countless retail and other businesses were shut or restricted to slow the spread of the pandemic. About 430,000 workers in Connecticut — nearly onefourth of the state’s employment level — have filed for unemployment compensation so far.

In February, the Department of Labor projected an increase of 6,950 jobs, or 0.4%, from April 1 to June 30, 2019, to the same three months in 2021. The sweep of the coronavirus has shattered those projections.

The modest job growth projection is now a “best-case scenario,” Krzyzek said. For employment to meet the projections of February, “strong growth in early 2021 will need to offset the 2020 losses that are now inevitable,” he said.

Krzyzek cited an analysis by IHS Global Insight that projects slow job growth in 2021 and employment returning to previously forecast levels by 2023.

Industries that took a hit from the pandemic — leisure and hospitality, retail and transportation — are expected to drive declines in employment, Krzyzek said. And low-wage industries, jobs requiring little education and small businesses with fewer than 99 workers are at high risk of damage due to the coronavirus.

Citing management consulting firm McKinsey & Co. that outlined various possibilities for recovery from COVID-19, Krzyzek said if the virus is

effectively contained in Connecticut, the economy would shrink by less than 10% — a significant contraction — in the current three-month period ending June 30. Full recovery would be expected by the end of the year.

In a “muted recovery,” the economy is expected to remain below 90% of its 2019 performance through the end of this year.

The projected two-year employment growth in Connecticut is comparable to many Northeast states, with the exception of Massachusetts, Krzyzek said. The Bay State largely owes its 2.3% projected two-year employment growth to the Boston metropolitan area.

New York, too, projects higher growth through 2021 than the rest of the Northeast. The increase is expected to be 2%, Krzyzek said.