Connecticut's economy shrank an estimated 4.8% in the first three months of the year, according to a new report on the coronavirus pandemic produced by Gov. Ned Lamont's office.

That estimate is based on the U.S. economy's first quarter performance, as reported by the Bureau of Economic Analysis last month. BEA will release first quarter data for all states, including Connecticut, in July.

The coronavirus shutdown has significantly impacted the state's economy. Source: Roadmap for Reopening Connecticut.

Connecticut's GDP grew 1.6% last year, 33rd in the country. The six New England states averaged 2.3% growth, as did the country.

The governor's Roadmap for Reopening Connecticut report estimates 35,000 businesses have closed since Lamont shut down nonessential employers March 20 to slow transmission of the coronavirus.

"While we kept more of our economy open than most states we have experienced significant business and employment loss," the report says.

Historic Job Losses

More than 530,000 unemployment claims have been filed since mid-March, with the state posting an historic loss of 266,300 jobs—almost all in the private sector—in April alone.

Connecticut employment fell 16.7% through the first four months of the year to 1,411,100—the lowest in more than two decades.

The New England region has lost over 1.3 million jobs this year.

Vermont employment has fallen 21.1%, the biggest percentage drop of any New England state, followed by Rhode Island (-19%), Massachusetts (-17.6%), Connecticut, New Hampshire (-16.5%), and Maine (-16.3%).

Sector Breakdown

The administration report says 43% of Connecticut unemployment claims came from closed and nonoperational businesses, including restaurants, bars, nail and hair salons, and museums.

Those companies accounted for about 27% of pre-pandemic employment and 10% of the state's annual GDP.

Other non-essential employers—including those in the technology, finance, and professional services sectors—that could transition to remote work accounted for 14% of unemployment claims.

The report said those sectors also employed 27% of the state's workforce and contributed 31% to its economic output.

Health risks and economic benefits vary by sector. Source: Roadmap for Reopening Connecticut.

Ten percent of Connecticut workers were employed by companies allowed to remain open—such as childcare facilities—but closed or cut operations because of lack of demand.

Those employers represented 30% of pandemic-related unemployment claims and 15% of annual GDP.

Only 13% of unemployment claims were filed by workers employed in essential businesses allowed to remain open, including manufacturing, construction, and essential retail.

The report says those sectors employed 36% of Connecticut's workforce and drove 43% of its annual GDP.

Objectives, Guidelines

"The unemployment numbers released last week were devastating and they highlight the need to move as swiftly—and as safely—as we can to get people back to work," said CBIA president and CEO Joe Brennan.

"The report lays out the path, but it is incumbent upon all of us to strictly follow guidelines so we can avoid any slowing down of the revitalization of our economy."

Lamont said the May 26 plan represents the "current best thinking" while warning that the "situation surrounding COVID-19 is dynamic and rapidly evolving."

"We learn new things about this virus every day and, as a result, the plans I've outlined in this report will change based on new facts, insights, and breakthroughs both here and around the world," the governor said.

The report establishes specific health objectives and guidelines for the phased reopening of the state's economy.

Connecticut began the first phase May 20 with a second targeted for June 20.

Risk Factors

The decision to open each phase is based on a health risk score with two weighted dimensions.

Contact intensity accounts for 40% and includes the expected proximity between employees, customers, and others, the length of that contact, and the number of people in a setting at the same time.

Modification potential accounts for 60% and includes the ability to sanitize and enforce social distancing.

The report notes that certain industries have higher risk factors, but that some of them, including restaurants, would provide an economic boost by reopening as they account for tens of thousands of unemployed workers.

Second Phase

The second phase includes:

  • Restaurants for indoor dining, but no bars
  • Accommodations industry, but no bars
  • Gyms, fitness, and sports clubs
  • Personal services
  • Outdoor arts and entertainment up to 50 people
  • Outdoor amusement parks
  • Movie theaters
  • Bowling alleys
  • Social clubs and pools
  • Zoos and aquariums

Other scheduled openings include certain youth sports (June 20), summer day camps (June 22), nonresidential workforce programs (mid-June), and K- 12 summer schools (July 6).

Criteria to transition to the second phase include:

  • Declining transmissions, with less than a 100-bed net increase in hospitalizations from the last week of phase one
  • Testing and contact tracing, with 100,000 tests a week connected with more than half of identified contacts within 48 hours
  • Lowering healthcare capacity, with less than 20% of hospital beds occupied by COVID-19 patients at the total peak of COVID-19 bed capacity
  • Implementing a testing plan for key workers and priority high-risk communities

Safeguards

Businesses included in phase two will receive social safeguard rules and regulations two weeks before the scheduled reopening.

"It's the responsibility of every employer, large or small, to do everything reasonable and practical to keep their plants, offices, stores, and other workplaces infection-free," Brennan said.

"Once these steps are taken, it's incumbent upon every employee to follow each rule and guideline laid out by the company."

The third phase will take place at least four weeks after the second.

It includes bars, indoor events spaces and venues, indoor amusement parks and arcades, and outdoor events up to 100 people.

Risk Management

The report says the state will "monitor and actively manage" several risks, including obtaining personal protective equipment and "residents' reluctance to re-engage with local commerce."

The report notes Connecticut "could revert to a prior reopening phase" if it sees a week of sustained increases in hospitalizations.

"Following the rules in phase one is the quickest way to phase two," Brennan said.

"We really have no choice—a resurgence of COVID-19 cases will cause more lasting damage than the original closure of the state's economy."