Personal income in state lagged rest of US amid pandemic

Unprecedented government stimulus stepped in for a nearly flattened private sector to power an 18% rise in personal income for Connecticut residents struggling in the coronavirus pandemic, according to federal statistics released Thursday.

The CARES Act that added $600 in weekly unemployment benefits ,$1,200 checks and support for nonprofits poured $28 billion, or a staggering 865% annual increase, in federal money in the AprilJune period over the previous three months, the U.S.

Department of Commerce reported.

“The coronavirus has set the table for anomalies we’ve never seen before,” said economist Donald Klepper-Smith. “Thegovernment is stepping in, covering the lack of economic activity and then some, We’re living off of government assistance. We can’t expect this to go on indefinitely.”

Net earnings, which account for salaries and wages, plunged 29%, down $14.8 billion in the second quarter. And dividends, interest and rent fell by $1.3 billion, or 8.5% less than in the first quarter.

Money from Washington wasn’t enough to lift Connecticut from 49th among the states in the rate of increase in the second quarter. Personal income is money from labor or production, home ownership, business or financial assets and transfers from government and business.

Personal income in the second quarter in Connecticut was $290.6 billion.

“Thank God we’re not 50th,” said Fred Carstensen, a professor of finance at the University of Connecticut.

That distinction belongs to Tennessee, which posted personal income of $352.5 billion, an increase of 15.8%. Massachusetts was No. 1 in the rate of growth, up76%, to $599 billion.

Carstensen blames Connecticut’s bottom rank on the loss of well-paid jobs and weak employment growth even before the start of the spread of COVID-19.

“We’ve been creating low-skill, low-wage jobs,” he said, citing tourism and hospitality, health care and logistics and transportation that includes a growing number of warehouse jobs.

“Despite all the stimulus wehave an economy that for all intents and purposes is languishing,” Klepper-Smith said.

Connecticut’s economy ranked 33rd among the states in economic growth in 2019 and expanded more slowly than other New England states.

Personal income in the U.S. was up 34.2%, accelerating from the 4.1% increase in the first quarter. The injection of federal money was up $2.5 trillion nationally in the second quarter after increasing $80.3 billion in the first three-month period.

In Connecticut, industries that reflected the steepest drops in personal income were health care, which cut back on elective services to cope with COVID-19; retail and restaurants that closed on government orders; and durable goods manufacturing that followed falling consumer purchases of cars, appliances and other large items.

Businesses did not begin to open in Connecticut until May 20, leaving as many as 800,000 workers filing for unemployment benefits after being laid off or furloughed.

In New England, New Hampshire was No. 47 among the states in its increase in personal income from the first to second quarters. Rhode Island was fifth, Vermont was No. 6 and Maine was No. 16.