Fazio: CT’s economy shrinkage ‘a blaring wake-up call to officials of all political parties’
October 1, 2022Fazio: CT’s economy shrinkage ‘a blaring wake-up call to officials of all political parties’
Hartford Courant
Connecticut’s economy shrank by 4.7% on an annual basis in the three months ending June 30, as earnings weakened in manufacturing and finance and insurance, two key industries, the U.S. Commerce Department reported.
The state ranked 49th in its economic performance in the second quarter. Only Wyoming’s economy was weaker. Overall, the U.S. economy shrank by 0.6% on an annual basis.
Growth in personal income in Connecticut, comprising wages, salaries, investment income and government payments such as Social Security, was weak, rising by 2.2%, the smallest increase among the states. Personal income growth in the U.S. on an annual basis was 5.8% in the second quarter.
Slowing the economy is an objective of the Federal Reserve as it raises interest rates to fight inflation that’s at its highest level in 40 years. Economists are debating whether the U.S. economy is in recession.
Low unemployment of 3.7% in August argues against a recession, which typically is characterized by large numbers of jobless workers.
“It would be a very strange recession if we’re in one,” said David Lehman, Connecticut’s economic development commissioner.
Earnings for durable goods manufacturing and finance and insurance plunged a total of nearly $1.1 billion in the three-month period. However, health care and social assistance was up nearly $500 million.
A little more than a month before Election Day, Republicans blamed Gov. Ned Lamont and President Joe Biden for the contracting state and national economies.
“For anyone with their feet planted in the middle class, this confirms what we already know and why our groceries, gas and cost of living are becoming more unaffordable,” said Senate Republican Leader Kevin Kelly of Stratford. “There is a better way than the Democrat policies and the Biden economy that clearly aren’t working for our families.”
Republican state Sen. Ryan Fazio of Greenwich said the “awful numbers are a blaring wake-up call to officials of all political parties.”
“Our state is rapidly heading in the wrong economic direction,” he said.
Lehman said quarterly data, which are occasionally revised, are “inherently volatile.”
Looking at numbers over 12 months provides a better picture, he said.
In the last four quarters, Connecticut’s economy expanded by 1.2%, slightly better than the U.S. performance of 1.1%, he said.
Chris DiPentima, president of the Connecticut Business & Industry Association, said the economic data show the impact of labor shortages, inflation and supply chain bottlenecks.
“Equally concerning was Connecticut’s personal income growth in the second quarter,” he said. “That continues a multi-year decline for a key measure of our economic competitiveness. While we still have the second highest personal income in the country, we are heading in the wrong direction.”
Economist Don Klepper-Smith said he believes Connecticut is in a recession.
“Nothing here in this data takes me off the fact we are in a recession,” he said.
Recessions, and their conclusions, are declared by the National Bureau of Economic Research, a private group in Cambridge, Massachusetts.
The most recent recession, according to the NBER, was a two-month downturn from February to April 2020 brought on by the COVID-19 pandemic.
Klepper-Smith said he does not expect the NBER to declare a recession, if one is underway, until December at the earliest to avoid affecting state and congressional elections Nov. 8.
