Connecticut’s economy, helped by government checks and a productive manufacturing sector, grew at a healthy, but still relatively weak, annual rate of 6% in the first three months of the year, the U.S. Commerce Department reported Friday.
As businesses and consumers emerge from the economic wreckage caused by the coronavirus pandemic, Connecticut’s growth lagged the the overall U.S. growth rate of 6.4% compared to the last quarter of 2020. Connecticut ranked No. 34 among all states for growth.
Among New England states, only Maine had a slower growth rate. Nationally, economic expansion ranged from 10.9% in Nevada to 2.9% in Washington, D.C.
Connecticut’s $294.5 billion economy in the January-March period was the second largest in New England, after Massachusetts. But in New England, only Maine’s economy grew more slowly, at 5.2%. Vermont barely edged out Connecticut, posting a 6.1% rate of growth.
“The increases in first-quarter Gross Domestic Product by state reflected the continued economic recovery, reopening of establishments and continued government response related to the COVID-19 pandemic,” the Commerce Department said.
Economic growth was helped in part by government assistance, such as direct economic impact payments, expanded unemployment benefits and Paycheck Protection Program loans, the Commerce Department said. The full economic effects of the COVID-19 pandemic cannot be quantified because the impacts cannot be separately identified, the government said.
Connecticut’s venerable manufacturing and finance and insurance sectors contributed the most to the state’s economic growth. A jump in retail reflecting renewed interest by consumers in shopping as malls and downtown stores reopened after being shut for months also helped propel economic growth.
The release of the economic growth data follows by just three days another Commerce Department report showing Connecticut was last among the states in personal income growth between the end of 2020 and the beginning of this year. The 42% rise in personal income — salaries, wages, dividends and other forms of income in addition to government pandemic relief — was significant. But it was outpaced by every other state.
Nationally, personal income was up 59.7%.
Fred Carstensen, a University of Connecticut economics professor and director of the Connecticut Center for Economic Analysis, posted on his LinkedIn account that the state has the “worst performing economy among all 50 states — dead last.”
“It never recovered in jobs or real output from 2008; it disconnected from the national economy,” he said.
Connecticut’s unemployment rate, a driver in economic growth and personal income, was 7.7% in May, significantly higher than the 5.8% U.S. rate. Jobs are up more than 18,000 so far this year and the unemployment rate is lower than it was more than five years after the start of the Great Recession of 2008, said Patrick Flaherty, research director at the Connecticut Department of Labor.
However, economist Don Klepper-Smith said Connecticut was poised for full jobs recovery before the pandemic last year. After COVID-19, the state was 150,000 jobs away from full recovery, he said.
The state will not return to its employment peak of 1.72 million “any time soon,” Klepper-Smith said.
Stephen Singer can be reached at ssinger@courant.com.
