Connecticut Personal Income Growth Ranked 48th
Connecticut’s personal income growth was the third slowest in the country in the first quarter of 2019.
Income grew 1.5% for the quarter—ahead of only Iowa and South Dakota—according to a new U.S. Bureau of Economic Analysis report.
The national average was 3.4%, down from 4.1% in the fourth quarter.
The report measures total earnings from wages, investments, and government payments such as Social Security and Medicare.
For the quarter in Connecticut, net earnings (salary and wages less government social insurance contributions) grew 1.3% or $572 million.
Investment returns declined $745 million (-4.8%) while government payments rose $1.17 billion (13.8%).
Key Economic Measure
Personal income growth is a key economic measure, an indicator of tax revenue and consumer spending trends.
“You now have a situation where consumer spending power is basically flat,” economist Don Klepper-Smith told the Hartford Courant.
“Without growth in consumer spending, there’s no reasonable rise in tax revenue. This is not a recipe for fiscal health.”
The six New England states averaged 2.6% growth in the first quarter, up from 2.4% in the previous three months.
Maine led the region, with income up 5.4%, the third highest overall growth in the country.
Income in Vermont grew 4.5%, followed by New Hampshire (3.8%), Massachusetts (2.7%), Rhode Island (1.7%), and Connecticut.
West Virginia Leads
West Virginia led all states for the quarter, with personal income growing 5.6%.
The BEA attributed much of West Virginia’s growth to the state’s booming construction sector.
Income grew 5.5% in Arizona, followed by Maine, Florida (5.1%), and New Mexico (5.1%).
South Dakota was 50th among all states, with income shrinking 0.6%, followed by Iowa (0.6%), Connecticut, New York (1.7%), and Rhode Island (1.7%).
Per Capita Income
Connecticut’s per capita income exceeds $75,000 and remains the nation’s highest, although growth continues to trail the region and the country.
For instance, personal income growth ranked in the bottom 10 states in both 2017 (1.4%; 44th) and 2018 (3.4%; 42nd).
That’s a troubling pattern, particularly when income growth is considered with other metrics, including job and economic growth.
Connecticut has recovered only 80% of all jobs lost in the last recession—the only New England state and one of just a handful across the country yet to reach the expansion mark.
The state’s economy has expanded just twice in the last 11 years, while much of the region and the country have experienced sustained growth.
Home sales in May fell for the 10th consecutive month, as Connecticut’s residential real estate market continues to struggle to recover from the 2008-2010 recession.
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