State’s GDP Falls 4.7% in Second Quarter
Connecticut’s GDP took a major hit in the second quarter of 2022, shrinking 4.7%. Only Wyoming’s economy fared worse in the April-June period.
Declines in the state’s key finance and insurance, durable goods manufacturing, and construction sectors were responsible for much of the second quarter contraction.
CBIA president and CEO Chris DiPentima said the latest U.S. Bureau of Economic Analysis report “clearly highlights the impact the state’s labor shortage crisis—along with inflation and supply chain bottlenecks—is having on our economy.”
“The finance and insurance and manufacturing sectors, two critical components of our economy, saw some of the biggest declines in the second quarter,” he added.
“The performance of those sectors, along with contraction in the construction and real estate sectors—which typically act as early warning signs—is very troubling.”
Labor Shortage Impact
Connecticut’s labor force has declined by 45,100 people since February, accounting for 41% of the New England region’s losses.
CBIA and Marcum’s 2022 Survey of Connecticut Businesses, released in September, found that 85% of employers struggle to find and retain employees, with 39% calling the lack of skilled applicants the greatest obstacle to growth.
“We still have 113,000 job openings,” DiPentima said. “That really prevents us from exploding on our GDP—obviously if you don’t have people working, then businesses aren’t recognizing the total output that they could.”
GDP declined in 40 states in the second quarter as the U.S. economy contracted 0.6%. GDP shrank 2.8% in the New England region.
Rhode Island’s economy was the region’s best in the second quarter, expanding 0.6%—eighth best in the country.
Vermont’s GDP shrank 0.2%, followed by Maine (-1.2%), New Hampshire (-2.5%), Massachusetts (-2.6%), and Connecticut.
Connecticut’s economic output expanded 4.8% in 2021, tied for 32nd in the country. New England’s GDP grew 6.3% last year, with the U.S. economy growing 5.9%.
Personal Income Growth
Connecticut’s personal income growth was the slowest of all states in the second quarter, fueling additional concerns about the state’s economic outlook.
The New England region averaged 3.2% growth, led by Vermont, where wages, salaries, investment income, and government benefits expanded 5.5%.
Maine posted 4.5% growth, followed by Rhode Island (4.5%), New Hampshire (4.5%), Massachusetts (3%), and Connecticut (2.2%). Personal income grew 5.8% across the U.S. in the second quarter.
DiPentima said Connecticut’s second quarter GDP and personal income numbers “should sound alarm bells for the state’s policymakers and those running for elected office this fall.”
“The second quarter personal income number represents a continued multi-year decline for a key measure of our economic competitiveness,” he said.
“While we still have the second highest personal income in the country, we are heading in the wrong direction.
“CBIA has proposed a broad package of policy solutions designed to address those factors driving the labor shortage—like the high costs of living and doing business—and transform the state’s economy.
“We cannot ignore our lagging economic recovery any longer. I urge those running for office to pledge their support for those recommendations and get our economy back on track.”
Based on the second quarter, Connecticut’s annualized GDP was $317.9 billion, 25% of New England’s $1.3 trillion economy, and the second largest in the region behind Massachusetts ($679.1 billion).
Ten of the 21 state industry sectors BEA tracks expanded in the second quarter, led by accommodation and food services, which grew 0.27%.
The healthcare sector grew 0.26%, followed by management (0.2%), administrative services (0.19%), arts, entertainment, and recreation (0.19%), retail trade (0.14%), transportation and warehousing (0.05%), information (0.04%), other services (0.04%), and utilities (0.01%).
Finance and insurance shrank 1.77% and led all losing sectors for a second consecutive quarter.
Durable goods manufacturing contracted 1.66%, followed by construction (-0.6%), real estate (-0.53%), nondurable goods manufacturing (-0.44%), professional services (-0.39%), wholesale trade (-0.36%), educational services (-0.14%), agriculture (-0.08%), government (-0.06%), and mining (-0.01%).
Retail trade fell 0.6%, followed by wholesale trade (-0.19%), transportation and warehousing (-0.16%), agriculture (-0.05%), mining (-0.3%), and (-0.02%).
The Texas economy expanded 1.8% in the second quarter to lead all states, followed by Florida (1.6%), West Virginia (1.4%), Delaware (1.2%), and Nevada (1%).
Wyoming’s GDP declined 4.8%, the worst of the 50 states, followed by Connecticut, Indiana (-3.3%), Arkansas (-3%), and Louisiana (-3%).
EXPLORE BY CATEGORY
Stay Connected with CBIA News Digests
The latest news and information delivered directly to your inbox.