State Posts 0.8% Second Quarter GDP Growth

Connecticut’s GDP grew 0.8% from April to June, marking a third consecutive quarter of soft growth as the labor shortage continued to impact the economy.

The state’s second quarter performance was 35th best in the country amid contractions in the finance and insurance and administrative support sectors.

While Connecticut’s economy expanded 2.9% last year—17th best in the country—it saw lackluster growth in the fourth quarter of 2022 and the first quarter of this year.

Forty-four states saw GDP growth in the second quarter, with the U.S. economy expanding 2.1%. The New England regional economy grew 1.8%.

Massachusetts led the region with 2.9% growth—12th best in the country—driven by strong gains in the utilities and professional services sectors.

New Hampshire’s economy expanded 0.7% (37th), followed by Rhode Island (0.7%; 39th), Maine (0.6%; 41st), and Vermont (-1.9%; 50th).

Policy Solutions

CBIA president and CEO Chris DiPentima said the ongoing labor shortage was the key factor impacting the state’s economic performance over the past three quarters.

“While there’s strong demand for Connecticut products and services, employers simply cannot find enough workers to meet that demand,” he said.

“Businesses across the state say the difficulty finding workers to fill a near-record number of open jobs is the biggest threat to our economic growth.

“Pursuing policy solutions that address the state’s high cost of living, housing, and childcare and expand opportunities and career pathways for all residents has never been more critical.”

Connecticut reached full recovery of the historic 292,400 jobs lost to 2020 pandemic lockdowns in October, with 12-month job growth now at 1.8%, 22nd best in the country.

The state has 96,000 job openings—29,000 (43%) more than before the pandemic—while the labor force has declined by 38,900 people (2%) over the same period.

“Connecticut has 1.5 job openings for every unemployed person,” DiPentima said.

“We must seize the opportunity to build on current momentum, further grow the population, better connect underserved communities and fill these open jobs.”

Sector Performance

Connecticut’s $336.5 billion economy accounts for 24% of New England’s $1.38 trillion GDP, and is the second largest in the region behind Massachusetts ($726.7 billion).

Ten of the 23 industry sectors that BEA tracks posted productivity gains in the second quarter, led by the utilities sector, which expanded 0.76%.

Professional services grew 0.51%, followed by durable goods manufacturing (0.42%), information (0.4%), transportation (0.18%), arts, entertainment, and recreation (0.18%), federal government (0.08%), agriculture (0.06%), healthcare and social assistance (0.03%), and mining (0.01%).

Connecticut’s critical finance and insurance sector, which shrank 1.58% in the first quarter, led all losing sectors again, declining 0.36%.

Administrative services declined 0.35%, followed by accommodation and food services (-0.42%), educational services (-0.17%), wholesale trade (-0.17%), retail trade (-0.16%), other services (-0.09%), real estate (-0.08%), military (-0.08%), state and local government (-0.07%), construction (-0.06%), nondurable goods manufacturing (-0.05%), and management (-0.02%).

The utilities and professional services sectors expanded in all 50 states while durable goods manufacturing increased in 48.

Accommodation and food services declined in every state but Arkansas, where it was unchanged.

Wyoming’s GDP grew 8.7% in the first quarter to lead all states, followed by Kansas (7.4%), Nebraska (5.9%), Texas (4.9%), and Alaska (4.8%).

Vermont’s economy was the slowest of any state in the second quarter, followed by Mississippi (-1.8%), Delaware (-0.7%), Arkansas (-0.4%), and Wisconsin (-0.1%).