Retail, Information, Healthcare Drive Third Quarter GDP

Connecticut’s economy expanded for a second consecutive quarter in the July-September period, growing 3%, 26th best among all states.

The U.S. Bureau of Economic Analysis’ quarterly report, released Dec. 20, shows the national economy expanded 3.1% in the third quarter.

The retail trade, information, and healthcare sectors drove productivity gains in the third quarter, following 2.8% growth in the previous period and a first quarter contraction.

New England’s GDP increased 2.9% in the third quarter after growing 2.2% in the April-June period and 3.6% in the first quarter.

New Hampshire’s economy grew 4.5% (6th overall), followed by Vermont (4.2%; 10th), Maine (3.6%; 17th), Rhode Island (3.6%; 18th), Connecticut, and Massachusetts (2.3%; 37th).

Connecticut’s quarter-over-quarter growth is tied with New Jersey for sixth in the Northeast, ahead of Massachusetts and New York (1.8%).

Growth Challenges

CBIA president and CEO Chris DiPentima said Connecticut’s labor shortage continues to hamper economic growth.

“While we saw GDP growth close to the national average—mostly because of productivity efficiencies and innovation—we’re behind in the Northeast because we’re just not getting the same job growth,” he said.

At 0.6%, Connecticut’s 12-month job growth is the slowest in the region and fifth worst in the country. The national rate is 2.4%.

While job openings are 5% above pre-pandemic levels, 28,100 people (-1.5%) have left the labor force since February 2020.

“Imagine where we’d be if job growth was fully meeting the demands of our economy,” DiPentima said.

He pointed to performances in neighboring states, including New Hampshire (seventh in U.S. job growth, 6th in GDP), Vermont (1.5% job growth, 4.2% GDP), and Rhode Island (1.7% job growth, 3.6% GDP).

“You cannot sustain long-term economic growth without job growth,” he said.

“Lawmakers must prioritize policy solutions that will lower our high cost of living—particularly energy, housing, childcare, and healthcare costs—when the General Assembly convenes next month.”

Sector Performance

Connecticut’s $295.3 billion real GDP accounts for 24% of New England’s $1.2 trillion economy, and is the second largest in the region behind Massachusetts ($631.4 billion). 

Sixteen of the 23 industry sectors that BEA tracks posted productivity gains in the third quarter, led by the retail trade sector, which expanded 0.98%. 

Information grew 0.52%, followed by healthcare (0.38%), durable goods manufacturing (0.33%), professional services (0.19%), wholesale trade (0.19%), finance and insurance (0.17%), educational services (0.17%), real estate (0.14%), management (0.12%), nondurable goods manufacturing (0.15%), accommodation and food services (0.09%), other services (0.04%), arts, entertainment, and recreation (0.02%), agriculture (0.01%), and military (0.01%).

Nationally, the retail sector grew 1.1% last quarter, with information expanding 0.33% and healthcare at 0.35%.

Connecticut’s durable goods manufacturing sector outperformed the national average (0.16%) with nondurable goods trailing U.S. growth of 0.16%.

Finance and insurance’s year-over-year growth is 4.13%, outperforming the U.S. sector (3.33%).

The state’s transportation and mining sectors were unchanged for the quarter, with transportation continuing to underperform national growth.

Construction output shrank 0.16% to lead all declining sectors, followed by administrative services (-0.15%), state and local government (-0.09%), transportation and warehousing (-0.05%), educational services (-0.03%), administrative services (-0.03%), utilities (-0.03%), and federal government (-0.01%).

GDP grew in 46 states in the third quarter, with Southeastern states claiming four of the top five growth rates, led by Arkansas at 6.9%.

Alabama posted 6% growth, followed by Mississippi (5.1%), Idaho (4.8%), and West Virginia (4.7%).

North Dakota’s economy shrank 2.3% with Nebraska (-1.4%), South Dakota (-0.8%), Montana (-0.1%), and Iowa (0%) filling out the bottom five states.

Personal Income

Connecticut’s personal income, a key measure of economic competitiveness, grew 2.9% in the third quarter—32nd best in the nation—after growing 3.3% in the second quarter and 9.3% in the first three months of the year. 

U.S. personal income grew 3.2% in the third quarter after increasing 9.3% in the first three months of the year and 3.8% in the second quarter.

The New England states averaged 2.5%, down from 2.6% last quarter, with Maine leading the region at 3.8%, 10th best in the country. 

Connecticut’s personal income grew 2.9% in the third quarter—32nd best in the nation.

Vermont saw 3.7% growth (11th), followed by New Hampshire (3.6%; 14th), Rhode Island (3.3%; 21st), Connecticut, and Massachusetts (1.8%; 43rd).

Arkansas (5.4%) posted the quarter’s largest increase in personal income, followed by Alabama (5%), Delaware (4.8%), Mississippi (4.8%), and North Carolina (4%).

North Dakota experienced the worst personal income quarterly performance among the 50 states at -0.7%, followed by Washington (0.7%), Nebraska (0.9%), Wyoming (1.6%), and Iowa (1.6%).