Connecticut rapidly increased its stimulus spending during the final three months of 2009, but that didn’t lead to a significant jump in newly created or saved jobs.
By the end of December, Connecticut had spent $280 million in stimulus grants. That was about a 580 percent increase from the February to October period, when the state spent $41 million.
But even as almost a quarter-billion dollars were pushed out the door, the number of newly created or saved jobs grew by only 74 above the 6,110 on record at the end of September.
That number is a far cry from the 41,000 jobs the federal government predicted would be created or saved in Connecticut as a result of the three-year spending plan, which began in February 2009.
Although economists and state officials say that the stimulus is having some positive impact on Connecticut, the idea that it is going to be a huge job creator continues to fade.
“Compared to the number of jobs we’ve lost since the start of recession, the jobs created through the stimulus package seems like a drop in the bucket,” said Steven Lanza, an economist and executive editor of The Connecticut Economy.
Connecticut has lost about 100,000 jobs since March 2008. Matthew Fritz, a spokesman for Gov. M. Jodi Rell, said the stimulus is working in Connecticut because its impact goes beyond just job creation.
The $280 million spent in Connecticut thru December only represents funds tied to job creation or preservation, like for construction projects or education, Fritz said. In total, however, state agencies actually received $2.94 billion in stimulus funds thru December, and spent $2.1 billion, mostly to help the unemployed and poor.
The state, for example, spent $1.1 billion on unemployment benefits, $638.8 million on its Medicaid program, and $59 million on food stamps.
“When determining the impact of the stimulus funds, you need to look at the full spectrum of where the money is going,” Fritz said. “Overall we believe the effort is working because of the indirect impact it’s having.”
Lanza said that stimulus spending, in conjunction with other government programs like the Troubled Asset Relief Program and “Cash for Clunkers”, helped save the economy from “falling off a cliff.” The programs are also a key contributor to recent growth in the economy, Lanza said.
The national gross domestic product, for example, expanded by 5.9 percent in the fourth quarter of 2009, the fastest rise in six years.
“Both businesses and consumers feel the government is doing something and that the economy is doing better than it was,” Lanza said. “That means consumers are going to be more willing to spend money, which is why you are seeing a bump in GDP numbers. Once the jobs begin to come back, spending will increase even more, which will help the recovery become self sustaining and allow the private sector to take over.”
The vast majority — 5,388, of the 6,184 jobs — created or retained in Connecticut have been in education. Transportation funds helped create 291 full-time jobs, just part of the almost 5,000 workers currently collecting paychecks on highway and road projects, Fritz said.
Fritz said 38 bridge and highway projects are under contract for $208 million and $49 million has been disbursed for transportation projects. That money should provide a boost to the state’s construction industry, which has been hit hard by the downturn. Construction lost 800 jobs in January, and 17,100 jobs, or 25 percent of its workforce, since June 2007.
Community service funds helped create or retain 280 jobs. Additionally, there are 79 workers gearing up to weatherize houses.
Lanza also pointed out that the job numbers detailed by Rell’s office don’t reflect the indirect benefits from the money that has been pumped into the state’s economy.
Lanza said every job saved means another job is added to the economy.
“That teacher whose job was saved goes out into the community and does the same amount of shopping they’ve always done, which helps preserve a job at Stop & Shop or Wal-Mart,” Lanza said. “An unemployed teacher would cut back on spending, which would negatively impact the economy.”
Regardless, Fritz said, the governor’s office will never be satisfied with the number of jobs stimulus funds create or save because of the high unemployment rate in the state.
