Connecticut workers earn more heading into holidays — but extra pay matched by inflation, data shows
“We certainly want high-growth, high-productivity jobs — but we need more people doing those jobs to really grow the economy.” David Lehman, Connecticut Department of Economic and Community Development commissioner
After 18 months of drastic swings in income during the COVID-19 pandemic, the average Connecticut earner headed into the 2021 holiday shopping season with more to spend — but with paychecks stretching not quite as far amid higher prices for many items.
The Bureau of Economic Analysis calculated personal income in Connecticut at $83,000 on a per capita basis in the third quarter of this year. While that was up more than $7,000 from two years ago for nearly a 10 percent bump, BEA used a far smaller estimate for Connecticut’s population than the official U.S. Census Bureau figure. Factoring in the census estimate, personal income in Connecticut would be up about 8 percent from the third quarter of 2019.
However, households are bracing for prices to continue climbing in the coming year. The median response in a Federal Reserve Bank of New York consumer survey was for a 6 percent increase in inflation over the coming 12 months.
Deposits in Connecticut banks hit an all-time high this fall, according to a separate report from the Federal Deposit Insurance Corp., with households and businesses socking away an extra $2.2 billion over three months to push bank deposits to $114.8 billion.
Speaking in early December at a Hartford economic summit, the commissioner of the Connecticut Department of Economic and Community Development said population and paychecks go hand-in-hand in driving economic momentum.
“We certainly want high-growth, high-productivity jobs — but we need more people doing those jobs to really grow the economy,” said David Lehman, DECD commissioner.
The third-quarter BEA estimates were the first since the start of the pandemic that were mostly in line with historic quarterly norms. Over the preceding five quarters, the numbers alternately cratered and spiked amid mass business closures and reopenings, and the timing of federal pandemic assistance to families and businesses.
In the new normal between July and September, Connecticut personal income gains were middle of the pack nationally at 2.1 percent growth from the preceding three months. Kentucky led the nation with 6.7 percent income growth in the third quarter, with New Jersey tops in the Northeast at 4.4 percent. New York lagged with just 1.3 percent growth in personal earnings statewide.
Connecticut remains short of its pre-pandemic employment numbers, even though there are plenty of job openings that have some employers scrambling despite upping pay and benefits to lure candidates. If job demand is one indicator for economic momentum, too many people are struggling still to make ends meet, according to Paul Romer, a Nobel Prize laureate who teaches economics at New York University.
“We’ve really failed in this very massive stimulus undertaking that we’ve had in the last few years, because it hasn’t put enough people back to work,” Romer said, speaking at the DECD summit in early December. “If we don’t turn that around, I don’t see how we can maintain a social fabric where everybody participates, everybody has social connections, everybody feels some dignity and some worth in what they do.”