UConn Economist: Spend Less, and Risk Being Worse Off
Economists at the University of Connecticut are calling on the state to use bonds that have been approved by the legislature but never issued. The Connecticut Center for Economic Analysis forecast reports that if the state relies only on traditional drivers like the housing market to grow the economy, it could begin to lose jobs again in 2014.
Report author Professor Fred Carstensen said that outlook changes dramatically if the state invests in already-approved projects using bonded capital. "That would add 15 to 28,000 jobs to the economy in the next couple of years," he said, "assuming these go forward rapidly. It would actually double the rate of growth and state output."
Carstensen said he's not worried that the strategy would exacerbate Connecticut's reputation for heavy state borrowing. "We need to make the kind of strategic investments that are going to increase the growth in the state's economy," he said. "If we don't do that, then the debt actually becomes worse. You can decide to spend less, and that actually makes you worse off."
The forecast says there are signs Connecticut's economic growth is already strengthening, although it has a way to go to catch up with the national recovery.