Connecticut’s economy grew 3.9 percent in the third quarter of 2017 — the eighth fastest growth rate of any state in the nation, according to a Wednesday report on real GDP by the U.S. Department of Commerce. The finance and insurance industry and the production of durable goods together accounted for 80 percent of Connecticut’s newly created jobs last year.
The news is a breath of fresh air for a state that saw its economy contract 4.4 percent during the first part of the year and has faced years of economic stagnation. In recent years, growth in Connecticut has been lackluster: only 76.4 percent of the jobs lost during the 2008 recession have returned, while income tax revenue declined for the first time since 2009. For Peter Gioia, vice president of and an economist at the Connecticut Business and Industry Association, the state’s recent growth is at least in part a product of the new administration’s arrival in Washington.
“On the economy, the Trump administration has done a lot of right things,” Gioia said. “Hate toward Trump spread the belief that CEOs will just pocket all the money and send it to shareholders, but just the opposite has happened. Look at all the multibillion-dollar investments. The country is doing great, and the world is doing pretty well too.”
The national trend in growth contributed to an accelerating recovery from the 2008 recession, Gioia added. With a good export market, stronger consumer purchasing power and the new Republican tax plan, he predicted, the nation will experience “spectacular growth” of 3.9 percent or higher in 2018.
Gioia was less optimistic about Connecticut. Although he said he views the news as encouraging, he stressed the necessity of putting the recent figure in perspective, since quarterly statistics can be volatile.
Donald Klepper-Smith, who served as an advisor to former Connecticut Gov. M. Jodi Rell, voiced similar skepticism.
“Isolating any one month or quarter of data often skews views of the bigger picture, which is offered by annual statistics,” he said.
Klepper-Smith pointed to nonfarm employment, median housing prices and job recovery rates as signs that Connecticut is actually underperforming compared to national standards. He especially emphasized the importance of year-to-date comparisons to understand growth trends.
Compared to the same time period just a year ago, the average growth in the first three quarters of 2017 was down 1.2 percent, Klepper-Smith said. Even assuming strong growth in the fourth quarter, he estimated, the annual rate of change for the state economy will likely be in the red.
Meanwhile, New Haven Economic Development Administrator Matthew Nemerson SOM ’81 offered a rosier prognosis.
“What goes down must come up, while what goes up must come down,” Nemerson said of the cyclical nature of the previous years’ economic performance.
He added that the National Defense Authorization Act, approved by Congress last month, will funnel billions of dollars toward defense contractors located in Connecticut, who produce helicopters, jet engines and submarines.
To improve the state’s economic prospects, Gioia said, Connecticut should address the job surplus throughout the state and find workers to fill those spaces, especially in the manufacturing sector. To do so, he added, Connecticut must motivate youth to remain in the state and fill the jobs vacated by retiring baby boomers.
“As a state, we can help ourselves exclusive of what’s happening in the country,” Gioia said. “That is Connecticut’s growth potential.”
Connecticut’s third quarter output translates to an annual GDP of $263.8 billion.
Nicole Ahn | email@example.com