State’s GDP Growth Rebounds in Third Quarter

12.28.2022
Economy

Connecticut’s GDP grew 2.5% in the third quarter of 2022, rebounding from an alarming second quarter contraction. 

The state’s economy was the 26th fastest growing in the country in the July-September period based on the U.S. Bureau of Economic Analysis’ latest economic report.

Growth was driven by the information and manufacturing sectors, with the wholesale and retail trade sectors also posting solid gains.

GDP grew in 47 states in the third quarter, as the U.S. economy expanded 3.2%. The New England regional economy grew 2.7%.

Massachusetts’ economic growth was the region’s best in the third quarter, expanding 3.2%—20th best in the country.

Maine’s GDP grew 2.8%, followed by Connecticut, New Hampshire (1.8%), Rhode Island (1.8%), and Vermont (1.3%).

Labor Shortage Impact

CBIA president and CEO Chris DiPentima said he was encouraged by the report, noting “strong third quarter performances in key sectors.”

“Nonetheless, the labor shortage crisis continues to dampen economic growth, with businesses unable to fully meet demand,” he said.

Connecticut’s labor force has declined by 52,100 people since February 2020, accounting for 35% of the New England region’s losses.

“Until we address the factors driving the labor shortage, Connecticut’s economic growth will remain middle-of-the-road.”

CBIA’s Chris DiPentima

CBIA and Marcum’s 2022 Survey of Connecticut Businesses, found that 85% of employers struggle to find and retain employees, with 39% calling the lack of workers the greatest obstacle to growth.

“Until we address the factors driving the labor shortage, Connecticut’s economic growth will remain middle-of-the-road,” DiPentima said.

“It’s critical that policymakers use the pending legislative session to lower the costs of living and doing business and expand career pathways and opportunities.”

Industry Sectors

Connecticut’s economy shrank 4.7% in the second quarter—second worst in the U.S.—after posting 5.5% growth in the first three months of the year.

Based on the third quarter, Connecticut’s annualized GDP was $252.5 billion, accounting for 24% of New England’s $1.03 trillion GDP, and the second largest in the region behind Massachusetts ($544.1 billion).

Sixteen of the 21 industry sectors that BEA tracks posted gains in the third quarter, led by the information sector, which grew 0.98%.

Nondurable goods manufacturing expanded 0.65%, followed by professional services (0.51%), wholesale trade (0.41%), retail trade (0.38%), healthcare (0.37%), transportation and warehousing (0.34%), arts, entertainment, and recreation (0.3%), educational services (0.15%), management (0.09%), other services (0.04%), administrative services (0.03%), real estate (0.02%), agriculture (0.02%), and mining (0.01%).

2022 GDP Growth

Finance and insurance shrank 0.66%, and led all losing sectors for a third consecutive quarter.

The construction sector contracted 0.59%, followed by utilities (-0.31%), durable goods manufacturing (-0.12%), accommodation and food services (-0.04%), and government (-0.03%).

Alaska’s economy expanded 8.7% in the third quarter to lead all states, followed by Texas (8.2%), Oklahoma (5.5%), Wyoming (5.3%), and North Dakota (5.2%)

Mississippi’s GDP declined 0.7%, the worst of the 50 states, followed by South Dakota (-0.5%) and Indiana (-0.3%). 

Iowa (0.3%) and Wisconsin (0.6%) had the slowest economic growth in the country.

Personal Income Growth

The BEA report also showed that Connecticut’s personal income grew 4.9% in the third quarter—25th best in the nation.

The New England region averaged 5.6% growth, led by Maine, where wages, salaries, investment income, and government benefits expanded 14.1%.

Massachusetts posted 5.5% growth, followed by Vermont (5.4%), Connecticut, New Hampshire (4.5%), and Rhode Island (2.8%).

Personal income grew 5.3% across the U.S. in the third quarter.

“It’s critical that lawmakers make affordability and opportunity the focus of the 2023 legislative session.”

DiPentima

DiPentima called the third quarter personal income numbers “a definite improvement over the second quarter,” when the state’s growth was slowest in the country.

“Personal income growth is a key measure of a state’s economic competitiveness,” he added. 

“Although Connecticut has the second highest personal income per capita in the country, we need continued growth in that area.”

DiPentima added that CBIA’s Transform Connecticut policy solutions were “designed to address those structural imbalances that hamper growth and competitiveness.”

“It’s critical that lawmakers make affordability and opportunity the focus of the 2023 legislative session,” he said.

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