Lagging Economic Indicator Shows GDP Growth In Connecticut
The U.S. Bureau of Economic Analysis said Connecticut’s economy grew at a 3.6 percent annual rate in the third quarter last year or $261 billion.
The national gross domestic product was 3.5 percent.
Connecticut’s rate third quarter performance placed it 27th out of 50 states and the District of Columbia.
Don Klepper-Smith, an economist with DataCore Partners, said the numbers are “basically in line with expectations, reflecting positive but modest growth”.
He said the quarterly numbers can be volatile so it’s better to wait for an entire year of data.
Connecticut’s gains in durable goods manufacturing, finance and insurance helped the state. Durable goods manufacturing, which includes aerospace, grew by 5.2 percent, which was just ahead of the national average growth rate.
Finance and insurance also did well, while constructive activity fell.
“All in all, not a bad report,” Klepper-Smith said.
Chris McClure, a spokesman for Gov. Dannel P. Malloy, said the data reflects what they’ve been seeing in revenue figures.
“While we have made key strategic investments to diversify Connecticut’s economy, it is not a surprise that when finance and insurance do well, Connecticut does well,” McClure said. “Nevertheless, this GDP growth is a report of what has already taken place and is not predictive of what could happen in future quarters, therefore we are keeping a close eye on economic trends to keep the state in the best position moving forward.”
Malloy is expected to release his budget next week. As part of that proposal, Malloy will reduce the insurance premium tax rate from from 1.75 percent to 1.5 percent.
By lowering the rate, the state will lose about $11 million in 2018 and $22 million in 2019. It’s unclear where Malloy will find the revenue to make up for the loss.
“Restructuring and lowering the premium tax will substantially improve market conditions for Connecticut-based insurance companies,” Malloy said earlier this week. “This change will save them millions in taxes paid to other states across the country.”
Malloy is also faced with closing a $1.5 billion deficit in the first year of the two-year budget. He hasn’t ruled out tax increases, but he has said he’s not starting with them.