Connecticut’s economy stumbled out of the gate in 2021 as the state battled a deadly winter wave of the coronavirus.Employers added fewer than 1,000 jobs in the first quarter, real GDP advanced just 1.8% on an annualized basis, and unemployment remained stuck above 8%.But as vaccines became widely available in the spring and COVID cases […]
Connecticut’s economy stumbled out of the gate in 2021 as the state battled a deadly winter wave of the coronavirus.
Employers added fewer than 1,000 jobs in the first quarter, real GDP advanced just 1.8% on an annualized basis, and unemployment remained stuck above 8%.
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Steven P. Lanza Associate Professor in Residence | UConn Department of Economics
But as vaccines became widely available in the spring and COVID cases plummeted, the economy really hit its stride. Payrolls grew by over 11,000 in quarter two, nearly 19,000 in quarter three and could increase another 15,000 in quarter four, if current trends continue.
State GDP surged at an annualized 5.9% in the spring and the unemployment rate dropped below 7% by September and stayed there.
Connecticut marked this progress even as it fought off the delta variant in the fall — a testament to the efficacy of the vaccines and the state’s public health efforts, and a harbinger of continued improvement in 2022, particularly now that children have access to vaccines and adults are rolling up their sleeves for boosters.
Expect the state to add another 37,000 jobs in the new year, with leisure and hospitality again leading the way as Nutmeggers steadily return to their pre-pandemic habits.
But the road to recovery will be bumpier for the retail trade sector, which is hobbled by a secular shift to online shopping that has only accelerated during the COVID era.
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Despite the rising level of payrolls, the state’s unemployment rate will remain stubbornly high, ending 2022 at about 6.2%. Real GDP, which appears to be advancing at a 4% annual rate in 2021, should match that pace in 2022.
Besides the state’s aging workforce and struggle to maintain a critical mass in the manufacturing and financial services sectors, Connecticut will face continued headwinds in 2022 from coronavirus variants and supply chain shortages.
But as John Adams famously said, every problem is an opportunity in disguise, so if supply bottlenecks trigger more local sourcing, Connecticut businesses could be the beneficiaries.
