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UConn Economists: Public Projects To Boost State Economy

By Mara Lee

February 20, 2012

University of Connecticut economists now say their previous economic forecast is too pessimistic, given the Federal Reserve's continuation of very low interest rates and the economic impact of the Biosciences Connecticut complex and the New Britain-Hartford busway.

Overall, the economists at UConn's Connecticut Center for Economic Analysis predict, there will be 18,000 jobs added by public and private employers between September 2011 and September 2013, a rate of about one-half of 1 percent per year.

The center forecasts that 7,000 of those jobs will result from the hiring and spending needed to add medical and dental students and begin work on a patient tower at University of Connecticut's hospital in Farmington, and the Jackson Labs building, along with construction of the busway. That number includes indirect jobs, as newly employed construction workers spend their incomes.

The economists say the state's total output of goods and services could grow by 3.3 percent in 2012, while national GDP growth is forecasted for 2.6 percent. The reason: North-Central Connecticut could benefit from $460 million in major construction projects this year and $1.5 billion in 2013.

The forecast also now assumes continued low interest rates, which the Federal Reserve declared would be in place for at least two years.

"Overall, the combination of the baseline forecast, the benefit of continuing low interest rates, and a bevy of major capital projects has the potential to give Connecticut growth rates above the national pattern through the end of 2013," the new UConn forecast said.

Fred Carstensen, director of the CCEA, has been a major advocate for the expansion of UConn's medical school and dental school and state support for Jackson Labs.

The new report also reiterated Carstensen's proposal that corporations be able to cash in on $2.5 billion in state tax credits that they can't now use. That money, if freed up, could go toward building "as much as 10 million square feet in new advanced manufacturing plants, research facilities, and other qualifying projects," Carstensen said.

This change, which Cartstensen has advocated for years, "would generate tens of thousands of new jobs and anchor major companies in the state for a generation," he said in the report. "The final payoff is that this approach is entirely self-financing: it generates so much net new revenue for the State that it repays fully the redemption of the tax credits and delivers a revenue bonus."