Connecticut economy shrinks in first quarter
Connecticut's economic output ebbed 1.4 percent in the first three months of this year, despite employers continuing to beat the bushes for help as customers continue to spend whether for leisure or business.
Among Northeast states, only New Jersey's economy contracted faster than Connecticut's at a 2.2 percent drop, according to a Thursday report by the U.S. Bureau of Economic Analysis.
The Connecticut economy was in rough alignment with New York's where gross domestic product and services contracted 1.3 percent in the first quarter, with both states slightly ahead of the U.S. decline of 1.6 percent.
New Hampshire's 1.2 percent growth led the nation in the first quarter, with Vermont, Massachusetts and Michigan the only other three states to register gains in GDP.
Even with a boost in economic activity at the close of last year, Connecticut had finished in the bottom third of states nationally for economic growth in 2021. With runaway inflation now top of mind on the heels of persistent disruptions to businesses as a result of the COVID-19 pandemic, U.S. economic output shrank in the first three months of this year.
Connecticut's decline of 1.4 percent in the first quarter of 2022, while not welcome, was better than the average state decline of 1.6 percent, the Commerce Department data showed.
Economic growth — the gains and losses in jobs, income and total output — is a perennial campaign issue. The report Thursday gives both
Democratic Gov. Ned Lamont and his opponent, Republican Bob Stefanowski, something to say.
Connecticut has long been a laggard in overall growth, finishing in the bottom third among states for all of 2021, previous reports showed. But the state has shown progress lately. With Thursday's report, Connecticut has now been in the top half among states for two quarters — placing No. 12 in the last three months of 2021 and No. 22 in the first three months of this year.
On Wednesday, the CEO of Paychex told investment analysts the payroll processing company has yet to see any of the classic telltales for recession in the national indicators it tracks.
“The growth is still there but it's slowed a little bit — it's more because you're not being able to find the employees, everybody knows that,” said Paychex CEO Marty Mucci, speaking Wednesday on a conference call. “You're hearing particularly front-line leisure and hospitality and other service functions trying to find people. The demand is still there, so there's a hunger for the need and you'll hear it over and over.”
Connecticut had one of the four largest increases in initial claims for unemployment the third week of June, according to the U.S. Department of Labor, at 3,100 initial claims for an increase of nearly 900. The number jumped again this past week to push the total above 3,500 new claims.
While much of that increase is likely the result of school vacation — the Connecticut Department of Labor's own data shows transportation workers making up the large majority of new unemployment claims — the number of hospitality workers filing for benefits has more than doubled in the past month.
Starting in July, the Connecticut Department of Labor is switching to a new claims processing and management system, scrapping the decades-old system that was overwhelmed at the outset of the pandemic due to claims volume and new criteria from the federal government.
Connecticut's economy has received a major boost during the pandemic — New York City renters and condo owners looking for alternatives in the suburbs or back country of Connecticut and the lower Hudson River valley.
While that has brought a fresh cadre of affluent spenders, it has also priced many lower-income earners from buying a home or renting an apartment they might have been able to afford prior to the pandemic.