We’re still the richest state, even as income gains lag
Connecticut’s signature claim to economic fame, our No. 1 status in per-capita income, remained intact in 2018 but the lead is shrinking slowly as Connecticut’s income growth lags.
Total income of all Connecticut residents hit $266 billion in 2018, up 3.2 percent, not adjusted for inflation, the U.S. Commerce Department reported Tuesday. That placed the state at No. 42 in growth for the year.
It comes out to $74,561 for every man, woman and child in the state — almost $4,500 ahead of Massachusetts, which just cracked $70,000 for the first time. And it’s 39 percent higher than the U.S. average of $53,712.
So, as usual, the news is mixed.
To put the numbers in perspective, no other two states are anywhere close to $4,500 apart. Connecticut’s lead, and therefore its claim as the richest state, is secure for the next several years at least. Moreover, income doesn’t include capital gains; it’s likely the profits of wealthy Fairfield County residents would push the lead even higher.
Speaking of those wealthiest of families, Connecticut is famously unequal in how its 3.57 million souls divide the income bounty. Still, we’re in the top 5 states when it comes to median household income, the best measure of overall prosperity.
The 2018 income data arrived on the day when Gov. Ned Lamont announced the agenda for his first bond commission meeting, set for April 2, when the state decides which projects will receive newly borrowed money. There was nothing, nada, zilch, for state economic development — for the first time in at least four years, and probably way more than that. I only checked back to 2015.
The state Department of Economic and Community Development still has authorized money to spend, so it’s not a crisis. Still this is the Lamont debt diet, and it’s directly related to that No. 42 ranking in total income gains.
The debt diet, with a sharply reduced borrowing total, will pare the amount Connecticut has to pay for debt service, certainly. But will it add to Connecticut’s prosperity? Not necessarily in the short run, if it reduces activity.
Back to the day’s report on per-capita income, No. 50 Mississippi came in at $37,994, the only state still below $40,000. Of course, you can rent a 2-bedroom apartment in downtown Jackson for $700, but who’s counting?
And how are we doing over the years? In 2010, Connecticut was more than $9,000 per person ahead of No. 2 Massachusetts, a whopping 17 percent gap. We were 53 percent ahead of the United States as a whole. That was a modern-day high point up from the 2000’s — but we’re definitely slipping since then.
At this rate, we could fall out of the No. 1 spot in a decade or less.
In a small bit of good news for Connecticut, the state was middle of the pack in the fourth quarter of 2018, with a gain of 5.2 percent, same as the nation’s gain for the quarter.
For the full year, total U.S. income reached $17.6 trillion in 2018, up 4.5 percent, driven by hefty gains in the western states. Massachusetts finished the year up 4.2 percent, good enough for No. 22.
Lots of numbers. What do they really mean? First of all, we’re rich, or more exactly, we have some very high-income earners, a vast, well-paid middle class — contrary to the nonsense rhetoric of naysayers — and we don’t have vast tracts of poverty compared with other states.
But the slow growth is what we tend to see and feel. The No. 42 income-gain ranking for 2018 echoed another slow year for job gains, when the state’s economy created just 2,200 new jobs, comparing annual averages of 2017 and last year.
That means not as many new job opportunities, not as much construction and less general activity. That can be a good thing if you want to see less congestion and less pillage of the landscape. If we had grown as much as other states in the last decade, we’d look a lot more like northern New Jersey, and believe me, even though opportunity is nice, we don’t want that sort of development gone amok.
Looking at the details, finance and insurance struggled in Connecticut in 2018, as that sector created $153 million less in income — even as the national income grew by $30 billion in that sector. Durable goods manufacturing fared better, growing by $454 million, a decent share of the nation’s $33 billion gain.
And so the debate over how to steer the state rages on, with fresh data that tells us what we already knew, only more so. We’re rich, we’re in danger of losing some of the wealthiest people in the best-paying industries, and we’re not growing fast enough to pay for bigger pensions and health care bills.
What that says about how much we should borrow to support local companies is complex. But zero is the wrong answer.