Real GDP of Connecticut

By Zoe Wilkins

Real gross domestic product (“real GDP”) is a measure of economic growth, and this analysis will look into Connecticut’s economy. The data presented in this analysis are from the Office of Governor Ned Lamont. 1 After the decrease from the first and second quarters, there was an increase in real GDP for the third quarter, 2019.

Figure 6: Real GDP in Conn.

Looking at the information, there has been an increase from 2019’s second quarter. Real GDP rose up to 2.1 percent during the third quarter. Commissioner Lehman said that what contributed to the growth of GDP was the stabilization of state finances, along with a reduction of relying on debt.

The fourth quarter is estimated using the FRED Data Set and U.S. Bureau of Economic Analysis. The information given was that GDP would go from 2.1 percent to 0.9 percent. 2

On January 8, 2020, the new forecast from the Federal Reserve Bank of Philadelphia stated that there will be a decrease in Connecticut’s economy. The decline in Connecticut’s economic index was at about 0.13 percent in January. This forecast was based off of the coincident index, which is formed off of unemployment rates and payroll data. Connecticut has made little progress in recovering jobs and wages. Phaneuf stated that Connecticut may enter into a recession within the next three months. The governor’s budget agency, along with the legislature’s neutral Office of Fiscal Analysis, forecasted that, by mid-November, Connecticut’s state income tax receipts will grow 13 percent over the next few years, based on economic trends. 3

Zoe Wilkins ’20

Major: Economics Hometown: Plainfield, New Jersey

On April 24, 2020, the Congressional Budget Office released that they expect GDP in the United States to decrease 40 percent year over year. This decrease in GDP will drop 11.8 percent from the first quarter to the second. COVID-19 has affected economic activity, but, by the time the third quarter is in effect, there should be a 5.4 percent increase year over year in that quarter, or a 23.5 percent increase from the second quarter. The federal deficit will end up going to $3.7 trillion by the end of 2020 if the efforts to mitigate economic problems continue. It has been estimated that, in 2021, the United States will have a deficit of $2.7 trillion. 4

1 Governor Lamont and Commissioner Lehman on Connecticut’s Economic Growth in the Third Quarter of 2019

2 FRED Data Set and U.S. Bureau of Economic Analysis

3 Fed projects economic slip for CT in first of 2020 by Keith M. Phaneuf

4 CBO predicts a 40 percent GDP drop this quarter