Information, Manufacturing Drive First Quarter GDP Growth

Connecticut’s economy expanded 1.8% in the first quarter of 2026, driven by gains in the information, manufacturing, and professional services sectors.

GDP growth was 17th best among all states for the first three months of the year, with New England’s economy expanding 2% and U.S. GDP growing 2.1%. 

Connecticut had the second fastest growing economy in New England behind Massachusetts, where GDP grew at a 2.4% clip.

Released June 25, the U.S. Bureau of Economic Analysis’ quarterly report shows continued momentum for the state’s economy, which grew 2.4% in 2025, 12th best in the country.

That growth comes against a backdrop of challenges, including rising inflation, federal trade policies, geopolitical uncertainty, slow hiring, rising unemployment, and a rapidly declining labor force.

‘Innovation, Adaptability’

“Despite persistent headwinds, Connecticut businesses continue to leverage innovation and adaptability to drive productivity gains,” said CBIA president and CEO Chris DiPentima.

“Labor force challenges and rising costs—from energy to healthcare—remain key barriers to growth, especially for small businesses. 

“It’s interesting to imagine where economic growth could be if we had the labor force to fill the state’s 85,000-plus job openings.” 

Over the past 12 months, 37,700 people have left Connecticut’s labor force, with the population of those working or looking for work 1.7% below pre-pandemic levels—in sharp contrast to most of the country.

DiPentima called the inability of employers to meet full demand for products and services because of the labor shortage “the greatest threat to long-term, sustainable economic growth.”

“As we head into election season, all candidates should be focusing on policies that will make Connecticut a more attractive and welcoming place to live and run a business,” he said.

“Connecticut needs meaningful policy solutions that address the key factors driving the state’s affordability crisis, including the growing cost of healthcare, housing, and energy.”

Sector Overview 

Connecticut’s $297.5 billion real GDP accounts for 24% of New England’s $1.2 trillion economy, and is the second largest in the region behind Massachusetts ($653.9 billion).

Fourteen of the industry supersectors tracked by BEA posted real growth in the first quarter, led by the information sector, which expanded 1.05%.

Durable goods manufacturing grew 0.97%, with total manufacturing output expanding 0.93%, despite the sector’s 7,000-plus job openings.

Professional, scientific, and technical services grew 0.46%, followed by healthcare and social assistance (0.19%), federal government (0.17%), state and local government (0.14%), real estate (0.11%), utilities (0.1%), arts, entertainment, and recreation (0.07%), management of companies (0.05%), agriculture (0.03%), transportation and warehousing (0.02%), mining (0.02%), and other services (0.02%).

Accommodation and food services was unchanged for the quarter.

Retail trade led all losing sectors, contracting 0.52% after shrinking 1.2% in 2025.

Educational services shrank 0.27%, followed by wholesale trade (-0.26%), finance and insurance (-0.25%), military (-0.11%), construction (-0.09%), nondurable goods manufacturing (-0.05%), administrative services and (-0.02%).

Washington state’s 4.5% growth led all states in the first quarter, followed by California (3.7%), South Carolina (3.2%), North Carolina (3.2%), and New Mexico (3.1%).

South Dakota’s economy contracted 1.6%%, with Nebraska (-0.9%), Iowa (-0.1%), Delaware (0%), and North Dakota (0.1%) filling out the bottom five.

Personal Income 

Connecticut’s personal income, a key measure of economic competitiveness, grew 2.2% in the first quarter—43rd in the nation. 

At $101,065, Connecticut’s per capita personal income remains the highest among all states, ahead of Massachusetts ($98,721) and California ($92,833).

New England per capita personal income rose 2.4% to $93,346, while U.S. per capita personal income grew 3.4% to $77,816. 

Connecticut’s per capita personal income is the highest of all states.

New Hampshire posted 3.4% personal income growth (18th), followed by Maine (3.3%), Vermont (2.8%), Rhode Island (2.5%), Connecticut, and Massachusetts (2.1%). 

North Dakota (22.4%) saw the quarter’s largest increase, followed by South Dakota (11.8%), Nebraska (8.8%), Iowa (7.7%), and Kansas (7.7%). 

Hawaii’s personal income shrank 23.9%, followed by Alaska (1.3%), Maryland (1.5%), Delaware (1.7%), and Idaho (2.1%). 

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For more information, contact Dustin Nord, director of the CBIA Foundation for Economic Growth & Opportunity.