University of Connecticut report says state's economic growth vanished with new US statistics

Connecticut's economic growth has evaporated, a University of Connecticut report said Thursday.

Data from the U.S. Commerce Department previously said Connecticut's rising economy from 2012 to 2013 was second only to Massachusetts in the Northeast. But government data released June 10 shows Connecticut's economy grew 0.6 percent last year, or 42nd among the states.

The new data "demolished the basis" for optimistic growth projections by UConn economists for this year and 2016, the report said.

Job creation, which is 22,000 below the previous peak in 2008, will likely stall and may even decline, it said.

"I've never before seen three years of economic growth disappear," said Fred Carstensen, director of the Connecticut Center of Economic Analysis. "All those things going on in your economy actually weren't."

The recession was deeper in Connecticut than in other states due to transportation bottlenecks on major highways and the loss of manufacturing in the state of nondurable goods that immediately used by consumers such as food and clothing.

The report also cited reduced support for hospitals, which means that Connecticut now foregoes more than $200 million in federal reimbursements.

"Given the extraordinarily weak economic growth, the result of not taking so much federal money is dramatic: It may account for a goodly share of the lost growth," it said.

The state began cutting support to hospitals by more than 75 percent, significantly increasing the tax on hospitals, the report said. "This also meant dramatically reducing federal reimbursements."

The report fuels a debate that began early this year with the budget proposed by Gov. Dannel P. Malloy and reworked by the legislature. Proposed tax increases have drawn fire from businesses and advocacy groups that say higher taxes will kill jobs.