HARTFORD, CT — Personal income in Connecticut increased by 1.3 percent over the past year, a growth rate that ranks the state 32nd in the nation, according to new data.
Nationwide, states saw personal income grown by an average rate of 2 percent a year over the past year, according to the Pew Charitable Trust’s “Fiscal 50,” an interactive database tracking personal income and tax revenue data.
Connecticut also had one of the slowest personal income growth rates since the most recent recession began, according to Pew. Between the final quarter of 2007 and second quarter of this year, the state saw personal income grow an average of 0.9 percent a year.
The only states with smaller average annual income growth since 2007 were Nevada (0.5 percent) and Illinois (0.8 percent). Alabama and Maine had the same 0.9 percent growth as Connecticut.
“This is basically an economy that’s moving in a very sluggish fashion,” Don Klepper-Smith, economist at DataCore Partners, said of Connecticut’s growth trend.
With such a “negligible” increase in consumer spending power, state residents likely don’t feel as though Connecticut is in an economic recovery, he said. Typically, recovery after a recession includes wage growth that makes people feel like they are bringing home more money, but that hasn’t been the case this time in Connecticut, he said.
Personal income includes individuals’ paychecks, Social Security benefits, employer contributions to retirement plans and health insurance, income from rent and property, as well as benefits received from programs like Medicare and Medicaid, among other things.
Personal income is a closely watched economic indicator. Among other things, according to Pew, federal officials use it in allocating money to states for programs like Medicaid, and states use it to predict tax revenue when planning budgets and estimate public services that will be needed.
All data in the Pew report were adjusted for inflation.
While most states had better income growth than Connecticut over the past year, six states saw personal income drop over that time.
North Dakota saw the biggest drop in personal income over the past year, at 3.6 percent, but had the largest rate of income growth since the recession, with an annual growth rate since 2007 of 4.7 percent.
In Connecticut and elsewhere, a looming development in the pipeline — rising health insurance premiums — has the potential to derail any income growth and recovery that’s taken place, said Klepper-Smith.
Consumers are bracing for much higher health insurance premiums in 2017. In Connecticut, two of the four insurance carriers that were on the health insurance exchange created by the Affordable Care Act have left it, and price tags for plans both on and off the exchange will carry double-digit percentage increases for next year.
“The Affordable Care Act, in its present form, has the potential to tip the scales toward recession in 2017,” Klepper-Smith said. “Many households are on the margin right now, making ends meet.”
Money that could better benefit the economy elsewhere will be “siphoned off” to cover insurance premiums, he said, which could lead to a “policy-induced recession.”
“That’s unprecedented,” he said.
Open enrollment for consumers — who are required under the ACA to have health insurance or face a penalty — began Tuesday and individuals now are shopping for 2017 plans. To ensure coverage that starts Jan. 1, consumers have to enroll in or renew a health plan by Dec. 15. The open enrollment period ends Jan. 31.
Pew’s “Fiscal 50” also looked at tax revenue trends, and data showed Connecticut’s tax revenue was $4.2 billion in the first quarter of this year, relatively flat with respect to where it has been in recent years.
Tax revenue has “recovered slowly and unevenly after falling in every state during the Great Recession,” according to the report.
When the recession hit Connecticut in the second quarter of 2008, the state’s tax revenue totaled $4.1 billion, according to the Pew data. It hit a low point of $3.3 billion in 2009’s fourth quarter, and has been at least $4 billion every quarter since the first quarter of 2012.