State’s GDP Shrinks 4.6% in First Quarter
Connecticut’s economy contracted 4.6% in the first quarter of 2020 as COVID-19 restrictions impacted business and consumer activity.
The state’s economy ranked 18th in the country in the first quarter, weathering the initial stages of the pandemic better than any Northeast state.
All 50 states saw GDP declines for the quarter, with the U.S. economy contracting 5%.
The U.S. Bureau of Economic Analysis said GDP growth was “impacted by the response to the spread of COVID-19, as governments issued stay-at-home orders.”
“This led to rapid changes in demand, as businesses and schools switched to remote work or canceled operations, and consumers canceled, restricted, or redirected their spending,” the agency noted in its July 7 report.
The six New England states averaged a 5.2% decline, with Maine’s economy shrinking 6.3%, the worst hit in the region.
Rhode Island saw a 6.2% contraction, followed by Vermont (-6.1%), New Hampshire (-5.7%), and Massachusetts (-5.1%).
New York’s economy performed the worst of the 11 Northeast states, shrinking 8.2%—second worst in the country behind Nevada.
Connecticut’s $287.7 billion annual GDP accounts for 25% of New England’s $1.14 trillion economy, second only to Massachusetts, which drives 52% of the region’s economic output.
“The silver lining is that Connecticut did relatively well in the first quarter,” economist Don Klepper-Smith told the Hartford Courant. “When you look at where New England was as a whole, Connecticut fared quite, quite nicely.”
Healthcare fell 0.77% in the first quarter, the worst of the state’s 15 declining sectors.
Accommodation and food services shrank 0.73% and the state’s key finance and insurance sector contracted 0.71%, with real estate (-0.45%) and retail (-0.43%) rounding out the five hardest hit sectors.
While durable goods manufacturing declined 0.2%, nondurable goods manufacturing expanded 0.26%, the best of the five sectors that grew in the first quarter.
Construction expanded 0.16%, followed by management (0.15%), utilities (0.05%), and agriculture (0.02%). Mining was unchanged.
Best, Worst States
The BEA report shows the accommodation and food services sector shrank 26.8% nationally, contributing to declines in all 50 states and the leading contributor to decreases in 29 states.
Finance and insurance (-9%), healthcare (-7.8%), and arts, entertainment, and recreation (-34.7%) were also among the worst performing sectors nationally.
Agriculture increased 15.5% nationally in the first quarter and was the leading contributor to moderating decreases in 17 states.
Nebraska’s economy contracted the least of any state in the first quarter, declining 1.3% with its agriculture sector expanding 2.59% to mitigate losses elsewhere.
South Dakota (-2.2%), Texas (-2.5%), North Dakota (-2.6%), and Kansas (-3.1%) rounded out the top five states.
Nevada (-8.2%), New York, Hawaii (-8.1%), Michigan (-6.8%), and Louisiana (-6.6%) saw the quarter’s worst economic declines.
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