Connecticut Economy Expands 3 Percent in Second Quarter
Connecticut’s economy expanded 3% in the second quarter of 2026, marking the seventh-fastest growth rate in the United States. This performance outpaced the national gross domestic product growth of 2.2% and the broader New England regional growth rate of 2.5% for the same period. The state’s economic expansion represented a substantial improvement from the first quarter, when Connecticut ranked 26th nationally in GDP growth.
Manufacturing and financial services powered the second-quarter surge. Total real GDP for the state reached $304 billion, accounting for 24.5% of New England’s $1.2 trillion economy and ranking second in the region behind Massachusetts at $652.5 billion. Fourteen of the 23 industry sectors tracked by the BEA posted real growth during the quarter.
Manufacturing and Financial Sectors Drive Output
Manufacturing led all state sectors with a 10.6% growth rate in the second quarter, more than triple the national manufacturing growth rate of 3.4%. Durable goods manufacturing saw an even sharper expansion at a 15.2% annual rate. This industrial output accounted for more than one-third of Connecticut’s total second-quarter economic growth.
“Manufacturing continues to be one of Connecticut’s greatest economic strengths, with companies finding ways to innovate, increase productivity, and grow to meet demand even with ongoing challenges,” said CBIA president and CEO Chris DiPentima.
Finance and insurance, which remains the state’s largest industry by output, grew by a healthy 4.9%. Utilities grew 7.7%, followed by wholesale trade (4.1%), real estate, rental and leasing (4%), and healthcare and social assistance (2.6%). Conversely, the military sector experienced the sharpest decline, contracting 45.6%, followed by transportation and warehousing (-10.1%) and retail trade (-4.5%).
Labor Shortages Threaten Ongoing Momentum
Despite robust production figures, the expansion faces significant constraints within the labor market. Connecticut’s labor force has declined 55,000 people so far in 2026. Meanwhile, employers have posted upwards of 86,000 available positions, with manufacturing accounting for more than 7,500 of those vacancies.
Robust hiring figures within the industrial sector have accompanied its strong production, resulting in 5,400 new manufacturing positions gained during the course of 2026. However, workforce availability remains a critical bottleneck for sustained economic progress.
“Connecticut’s growth is encouraging, but the state must address persistent labor shortages so we can sustain this growth and not give companies reasons to look outside the state to meet growing demand,” DiPentima said. “That means addressing high living and business costs, making it easier for people to build their lives here and easier for businesses to hire, grow, and keep good jobs here.”
Personal Income Growth Outpaces Regional Peers
Personal income in Connecticut rose 5.3% during the second quarter, placing the state 12th best nationally and leading all New England states. Vermont followed with 4.8% personal income growth, while Massachusetts recorded 4.4%.
Connecticut’s per capita personal income reached $106,299, maintaining the highest ranking of all states ahead of Massachusetts ($102,328) and New York ($96,276). The state’s five-year annual personal income growth rate stood at 6.1%, ranking ninth fastest nationwide, while its five-year annual growth rate was 2.3%, trailing the national rate of 2.6%.
