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Connecticut Economic Digest: February 1999 issue
Baby Boomers - Drivers Of Change | Industry Clusters | Housing Update | The Patriots Are Coming! | While Current Expansion Continues, Its Future Is Less Certain

Baby Boomers - Drivers Of Change
By Adele DeFrancesco, Operations Coordinator

In the 1880s, at a time when life expectancy was 45 years, German Chancellor Otto von Bismarck set the retirement age at 65. In 1999 the first of the baby boomers will be 53 and have just a decade to get ready for that milestone age, and as with all the others, they are expected to change that life phase forever.

Boomer Impact

From its beginning the influence of the Baby Boom Era has been remarkable. The years between 1946 and 1964 produced approximately 76 million American children, an average of four million births per year for 19 years. For the five decades since 1946 this generation has burst into every life phase, and reactions to its wants and needs have resulted in major changes and innovations. In its early childhood it brought success to the baby-care guidance of Dr. Spock and the geared-to-children entertainment of Howdy Doody, The Mickey Mouse Club, and Sesame Street. When the first boomers became teenagers, "Teeny Boppers" were recognized as a significant target-market, and with the sixties the world recognized the cultural impact of America's deep-thinking, soul-searching, "Flower Children." Who would have suspected then that in the seventies and eighties the boomers would become "Yuppies" pursuing an upscale life style, that contributed to both the refurbishment of urban neighborhoods and the suburban development of open farmland?

A report compiled by The Urban Institute and released by the U.S. Department of Labor in June 1997 acknowledged that at each stage in the life cycle, the baby boom generation has changed the demand for public services. In the 1950s and 1960s, the public policy challenge centered on the need for schools; by the mid 1960s, the labor market and institutions of higher education were challenged to absorb larger numbers of individuals; in the 1970s and continuing today, there has been a redefinition of a number of social and economic institutions such as family and work. The social and policy phenomena associated with the baby boom result from a complex interaction of (a) sheer numbers of people in this generation and (b) the coincident occurrence of important events and developments in society and the economy as a whole.

The Generational Cohort

According to the Urban Institute, demographers define a generational cohort as "a group of people born over a relatively short and contiguous time period that is deeply influenced and bound together by the events of their formative years." The U.S. boom generation is categorized into two distinct groups. The first half was born between 1946 and 1955, the second half, between 1956 and 1964. The distinction between the two groups is especially defined by the very different labor market and economic conditions each faced as they entered their work years.

In a May 1993 article for American Demographics magazine, Diane Crispell described six different generational groups: the GI generation, the Depression generation, war babies, baby boomers, baby busters, and the baby boomlet. When the boomers retire, the baby busters and boomlets are the workers who will have to carry the Social Security program, and once again the boomers' size and longevity (now in terms of life-expectancy) pose the challenge.

Impact On Social Security

Having the boomers so close to making demands on the program has brought a sense of urgency to long-needed Social Security reform. A Scripps Howard Newspapers article from December 1998, "Summit goal: Social Security as a pension, not a pittance," notes that the Social Security system won't go broke, but by 2032 it will be able to pay benefits only at 75% of today's level. For years, Social Security has received more in payroll taxes than it pays in benefits so that it now has about $700 billion in a "trust fund" of no-risk U.S. bonds. However, in 2022 Social Security will start spending more than it collects, with no cushion left by 2032. Currently 3.3 workers pay into the system for every retiree drawing benefits, but by 2025 there will be only 2.2 workers for every beneficiary, while recipients are expected to live and collect Social Security longer than their parents and grandparents.

Boomers As Investors

Several options have been raised to save Social Security; some involve self-investment. For prior generations that might have been an unlikely option, but once again boomers are different. The Federal Reserve Bank of San Francisco's June 26, 1998 Economic Letter discusses the Life Cycle Hypothesis which predicts that household income will reflect the stage of the earner's life cycle. It notes the impact boomers have made in their working years: "When people grow a bit older and begin to think about retirement, one would expect that they would begin investing more in financial assets. The arrival of a large cohort at that stage of the life cycle would raise the price of financial securities. The first wave of baby boomers reached age 35 in 1981, which coincides roughly with the beginning of the long bull market in stocks. This may reflect (at least in part) the predicted Life Cycle effects." It is apparent that working age boomers are involved investors. As a result, if self-investment becomes part of the solution for Social Security reform, boomers will probably step up and set the example for those who will follow.

Ongoing Impact

Unlike Von Bismarck's 1880s, the life expectancy is now over 75 years in the U.S., and some experts say the upper limit of human life is about 115 to 120 years. (Earl Fairbanks, Oregon Labor Trends, June 1997). Given that life span, the influence the boomers have had on their first five decades will continue on in decades six, seven, eight, nine, ten and eleven!

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Industry Clusters
1999 Legislation Planned

Last year, SB 599 "The Cluster Bill" enacted critically important changes - broader applicability of the 6 percent research and development (R&D) tax credit to smaller companies and allowance of the R&D tax credit carry-forward for 15 years. The 1999 "Cluster Bill"will further enhance opportunities for small and medium entrepreneurial firms that commonly incur losses in formative years as well as stimulate investor interest in Connecticut companies. Accordingly, the 1999 bill will likely provide:

  • An increase in the net operating loss (NOL) carry-forward period from 5 to 20 years, allowing Connecticut to join more than 30 other states currently at the federal NOL level;
  • A permit to resell or allow the refundability of R&D tax credits for at least small companies (less than $50 million in revenue);
  • Elimination of the capital gains and income taxes on investments in small Connecticut companies that are held for more than five years.

A previous University of Connecticut's Center for Economic Analysis (CCEA) study, showed the increase from 5 to 20 years in the carry-forward period for net operating losses (NOLs), would add about 600 jobs annually. The growth associated with expanding and selling tax credits exceeds 6,900 jobs.

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Housing Update
Housing Permits Up 27.5% In 1998

Commissioner James F. Abromaitis of the Connecticut Department of Economic and Community Development today announced that Connecticut communities authorized 1,129 new housing units in December 1998, a 81.5 percent increase compared to December of 1997 when 622 were authorized.

The Department further indicated that the 1,129 units permitted in December 1998 represent an increase of 38.2 percent from the 817 units permitted in November 1998. The year-to-date permits are up 27.5 percent, from 9,054 through December 1997, to 11,541 through December 1998.

"The Connecticut housing market continues to show strength," Commissioner Abromaitis said. "The increase in housing starts, especially in our urban areas, is particularly noteworthy."

Reports from municipal officials throughout the state indicate that Windham County with 311.1 percent showed the greatest percentage increase in December compared to the same month a year ago. Middlesex County followed with a 156.5 percent increase.

Fairfield County documented the largest number of new, authorized units in December with 374. Hartford County followed with 186 units and New Haven County had 147 units. Totals for 1998 indicate that Danbury led all Connecticut communities with 926 units, followed by Manchester with 483 and Newtown with 252.

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The Patriots Are Coming! The Patriots Are Coming!
By Joseph Slepski, Research Analyst

Get ready tailgaters and fire up your grills, football is coming to Hartford. As part of the $1 billion Adriaenís Landing project, The National Football Leagueís New England Patriots will be playing their games in downtown Hartford in a brand new 68,000 seat $350 million stadium beginning in the fall of 2001. In addition, the University of Connecticutís football team will upgrade their status to Division 1- A and become co-tenants in this new stadium. It is also expected that major concert acts will make the stadium a stop on their tours.

Game Plan

In May 1998, Phoenix Home Mutual Insurance Company proposed the construction of Adriaenís Landing. The proposal consisted of a 35,000-40,000 seat domed stadium to house University of Connecticut football which would be attached to a convention center along with 400,000 to 500,000 square feet of retail and entertainment space. In November 1998 the plan was modified when the stadium plan was changed to accommodate the Patriots. Robert Kraft, owner of the Patriots, has pledged to build a hotel connected to the stadium and also a National Football League retail center.

The question to be asked is whether or not this is a worthy investment. The State of Connecticut will allocate more than $300 million in state bonds for the stadium and convention center. These bonds are projected to be paid for by a tax on tickets. The Capital City Economic Development Authority must find $210 million in private investment. The Patriots will play 10-12 games per season in this stadium, while UConn will play six games. Even when concerts are included, this stadium will be utilized only about 20 times per year. Even the staunchest supporters of this plan would not call this a good investment.

This is where the convention center comes into play. The Capital City Economic Development Authority estimates a convention center could draw 120,000 visitors a year to the city and pump $75 million into the regionís economy. The authority also projects that the retail and entertainment section of Adriaenís Landing would include specialty stores, entertainment venues, a large movie complex, jazz clubs, music and interactive entertainment and parking. It is expected to create 700 permanent jobs.

There are only two other convention-stadium complexes in the country, located in St. Louis and Indianapolis. Indianapolis, which opened their complex in 1984, has seen the creation of 49,000 new jobs since that time and more than $211.4 million in local and state government revenue has also been generated since that time. The number of meetings at the convention center has gone up from 30 to 380. In essence, the complex has revitalized the downtown core. Even Market Square Arena in Indianapolis, which houses basketball and hockey has seen an increase in other bookings such as concerts and gymnastics.


Even though this plan looks like a big win for Hartford, there are still concerns. Urban Strategies, Inc. of Toronto in an economic impact study presented a different view of Hartfordís future. While Urban Strategies is in favor of a stadium and convention center complex, they are against the allocation of several hundred thousand square feet of retail space. Urban Strategies feels that while festival marketplaces have been successful in places like Boston and Baltimore, Hartford is not large enough from a tourist standpoint to support such a project. Urban Strategies instead advocates the construction of 1,250 units of downtown housing.

It is also not entirely appropriate to compare Hartford to St. Louis and Indianapolis due to the fact that those two cities have domed stadiums which can accommodate more events than the open-air stadium in Hartford can. It is also pointed out that the other two cities have a better infrastructure, better public transportation system and better parking than Hartford. Hartford, though, is easily accessible by both air and highway. Many people also remember the Hartford Whalers who broke the hearts of many fans by moving to North Carolina after playing in Hartford for more than twenty years.


Is this a good investment? That question is almost impossible to answer objectively. Sports fans will think that it is, non-sports fans will think that it is not. However, remember that last year at this time people were questioning whether a $19 million baseball stadium in Bridgeport was a good investment. That question was answered when 300,000 fans attended the games, 500 jobs were created and a $1 billion Harbour Place development was begun. National news organizations reported on how a baseball team revitalized an entire city. If the same results can occur in Hartford, the investment will be worth it.

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While Current Expansion Continues, Its Future Is Less Certain

The Connecticut coincident employment index rebounded to a new peak with the release of (preliminary) November data. The coincident index recovered all of its September fall after having reached new peaks in June, July, and August. The coincident index now lies just above its prior peak in August. The leading index declined once again, making it the fifth decrease in the last six months. (The October number was revised upward.) The leading index, however, still lies above its August and September levels. As noted before, the August and September retrenchment in the leading index probably reflected in large measure the GM and SNET strikes. As such, considerable uncertainty still exists about whether a downturn in the Connecticut economy is around the corner. We are not yet prepared to call a reversal of direction for the leading index. Despite this we shall continue to monitor the situation closely to identify if and when the leading index signals such a downturn.

As noted before in this column, the growth of the labor force provides an effective constraint on the growth of the Connecticut economy. The construction of the new football stadium for both the New England Patriots and the University of Connecticut football team as well as the other construction associated with Adriaenís Landing will provide a boost to the Connecticut economy. The Hartford labor market area will experience the largest share of this activity. Similar construction activity, if on a smaller scale, is also scheduled for New Haven and Bridgeport. Thousands of new construction jobs should generate a significant growth in income and economic activity. In light of such developments, it is difficult to see how the Connecticut economy can slip into recession. But at the same time, a labor shortage produces an untimely drag on economic expansion. Of course, the needed construction employment may be filled partly by out of state workers, which also occurred during the construction boom in the late 1980s.

In summary, the coincident employment index rose from 92.5 in November 1997 to 96.4 in November 1998. All four index components, once again, point in a positive direction on a year-overyear basis with higher nonfarm employment, higher total employment, a lower insured unemployment rate, and a lower total unemployment rate.

The leading employment index decreased from 90.5 in November 1997 to 89.6 in November 1998. Three of the five index components sent negative signals on a yearover- year basis with a higher short-duration (less than 15 weeks) unemployment rate, higher initial claims for unemployment insurance, and lower Hartford help-wanted advertising. The other two components sent positive signals on a year-over-year basis with a longer average work week of manufacturing production workers and higher total housing permits.

SOURCE: Connecticut Center for or Economic Analysis, University of Connecticut. Developed by Pami Dua [Economic Cycle Research Institute; NY,NY] and Stephen M. Miller [(860) 486-3853, Storrs Campus]. Kathryn E. Parr and Hulya Varol [(860) 486-3022, Storrs Campus] provided research support.

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Published by the Connecticut Department of Labor, Office of Research
Last Updated: October 15, 2002