State’s Economy Slows in First Quarter
Connecticut’s economy stalled in the first quarter of 2023, growing just 0.3% with productivity declines in a number of key industry sectors.
That represented the sixth slowest growth of all states based on the U.S. Bureau of Economic Analysis’ latest economic report.
Connecticut’s GDP expanded 2.4% in 2022—17th best in the country—despite lackluster fourth quarter growth of 0.1%.
GDP grew in all 50 states in the first quarter as the U.S. economy expanded 2%. The New England regional economy grew 1.6%.
Massachusetts led the region with 2.5% growth—19th best in the country—driven by strong gains in the healthcare, retail trade, and real estate sectors.
Maine’s economy expanded 1.6%, followed by New Hampshire (1.3%), Vermont (0.4%), Connecticut, and Rhode Island (0.1%).
CBIA president and CEO Chris DiPentima said a number of factors are hampering economic growth, including the labor shortage.
“It’s a discouraging beginning to 2023, particularly given the productivity downturns in the key manufacturing and finance and insurance sectors,” DiPentima said.
“If anything, the latest GDP report should serve not just as a reminder of our challenges, but reinforce the need to aggressively pursue policies that allow us to better overcome the main factors slowing economic growth—the labor shortage, the state’s cost of living, and the high cost of doing business here.”
Connecticut has 94,000 job openings—34% more than before the pandemic—while the labor force has declined dramatically, down 45,800 people (-2.3%) in the last 12 months.
Gov. Ned Lamont told the Connecticut Post that while “we still have a way to go,” the state’s economy has momentum.
“I’ve got 100,000 jobs that I can’t fill,” he said. “We’ve got amazing anchor tenants. The manufacturing is there with long-term contracts.
“Life sciences in the greater New Haven area and UConn reach, I think you see great growth, new business startups there.”
Connecticut’s $333.1 billion economy accounts for 24% of New England’s $1.37 trillion GDP, and is the second largest in the region behind Massachusetts ($721.9 billion).
Fifteen of the 23 industry sectors that BEA tracks posted productivity gains in the first quarter, led by the healthcare sector, which expanded 0.76% after growing 0.36% in 2022.
Retail trade—the worst performing sector in 2022—grew 0.54%, followed by information (0.47%), wholesale trade (0.37%), arts, entertainment, and recreation (0.3%), accommodation and food services (0.16%), transportation (0.13%), professional services (0.12%), state and local government (0.11%), military (0.1%), federal government (0.08%), administrative services (0.07%), and other services (0.02%).
The state’s agriculture, mining, and utilities sectors all posted no growth in the first quarter.
Connecticut’s finance and insurance sector saw the best growth of any sector in 2022, but contracted an alarming 1.58% to begin this year.
Durable goods manufacturing shrank 0.71%, followed by real estate (-0.42%), nondurable goods manufacturing (-0.07%), management (-0.07%), educational services (-0.04%), and construction (-0.03%).
North Dakota’s GDP expanded 12.4% in the first quarter to lead all states, followed by Nebraska (12.3%), South Dakota (10.1%), Kansas (6%), and Montana (6%).
Rhode Island’s economy was the slowest of any state in the first quarter, followed by Alabama (0.1%), Arkansas (0.2%), West Virginia (0.2%), and Illinois (0.2%).
Connecticut personal income grew 5.5% in the first quarter—36th best in the nation—after growing 2.6% last year (27th).
U.S. personal income grew 5.1% in the first three months of the year after growing 2.4% last year.
The New England states averaged 2.7% growth, with Maine’s personal income expanding 11.4% to lead the region and the country.
Personal income grew 6.1% in New Hampshire, followed by Vermont (6%), Rhode Island (5.8%), Connecticut, and Massachusetts (-0.9%).
Maine saw the country’s best growth, followed by Nebraska (11.1%), North Dakota (11%), Iowa (10.1%), and South Dakota (9.2%).
EXPLORE BY CATEGORY
Stay Connected with CBIA News Digests
The latest news and information delivered directly to your inbox.