William McEachern

English

Research Papers in Economics

Death Valley
Real gross state product, an inflation-
adjusted estimate of the dollar value of
goods and services produced in
Connecticut, reached $138.1 billion in
1998 (using 1996 chain-weighted dollars),
up 4.2% from 1997. In the nation, real
GDP grew 5.1%.  The bar chart below
compares Connecticut’s annual percent-
age changes to the U.S.  
Connecticut’s plunging growth rate
after 1988 is unmistakable. Growth trend-
ed down each year, turning negative in
1991—a precipitous drop of 2.3%.  After
descending into Death Valley, the state
began its slow recovery, with the growth
rate increasing each year through 1997.
The biggest pop came in 1997, when
growth more than doubled to 6.3%, ver-
sus 3.0% the year before.  For the first
time in a decade, Connecticut’s growth in
1997 topped the nation’s. 
The state’s Great Recession took its toll
on state production.  The level of output
achieved in 1989 was not surpassed until
1994, five years later.  Nationally, after
slipping in 1991, output grew enough in
1992 to exceed its 1990 level.  So while
Connecticut took five years to make up
for lost ground, the nation took but two.
Between 1988 and 1994, Connecticut’s
gross state product grew only 2.1% com-
pared to 12.8% for gross domestic prod-
uct.  No wonder people left the state in
droves (see pages 12-13).  Since 1993,
growth has been closer—17.3% for
Connecticut versus 18.5% for the nation.
Connecticut’s Poorest…
Recent federal estimates show that
Connecticut’s poverty rate has dropped
since the middle of the decade, falling
from 10.7% for 1994-1996 to 8.4% in
1997-1999 (annual rates for three years
are averaged for greater reliability). The
line chart shows the three-year moving
averages for Connecticut and the United
States since the beginning of the decade.
The state poverty rate climbed from 4.3%
in 1988-1990 to 10.7% in 1994-1996,
implying a growth in the number of
poor people from about 140,000 to
350,000.  By 1997-1999, the rate had
subsided to 8.4%, or about 275,000
people, but nearly double the total at
the beginning of the decade.  Thus, at
least in terms of poverty rates,
Connecticut has a way to go yet to get
down to pre-recession levels.
Throughout the decade, the national
poverty rate stood at least four percent-
age points higher than Connecticut’s.
The national rate also moved within a
relatively narrower range, rising from
13.1% in 1988-1990 to 14.8% in 1992-
1994, then slipping to 12.6% most recent-
ly. One of the strongest national recover-
ies on record cut the national poverty rate
by only one seventh and the state poverty
rate by one fifth. 
Incidentally, the poverty threshold in
1999 was $13,423 for a family of one par-
ent with two children under 18.  For a
parent with three children, the threshold
was $16,954. Although the cost of living
varies considerably across states, the
same poverty thresholds are used in every
state. Since the cost of living in
Connecticut exceeds the national average,
incomes are stretched thinner here, so our
poverty rate tends to be understated. Still,
the bias is probably smaller now than in
1990, when Connecticut housing costs
were much higher relative to the national
average. Also, the state’s poor bene-
fited from the cut in the sales tax
from 8% to 6%, and they are effec-
tively exempt from the state income
tax introduced in late 1991. 
…And Connecticut’s
Wealthiest
Each fall Forbes magazine identifies
the “400 Richest People in America”
based on net wealth. The 2000 list
includes eight people from
Connecticut, a total that ranks the
state tenth among the 50 states.
Connecticut’s total exceeds that of the
bottom third of all states combined. 
When adjusted for population,
Connecticut ranks sixth in the nation in
2000, with 2.4 Forbes members per mil-
lion residents—behind California (3.2),
Colorado (3.0), Massachusetts (2.6), New
York (2.6), and Washington (2.6). 
All eight Connecticut residents on the
2000 Forbes list are from Fairfield County
and all but two are from Greenwich.
Three people, all from Greenwich, have
been listed each year since at least 1996.
Lawrence Flinn, 65 years old, made his
$1.8 billion from TV Guide; Mary
Anselmo, 71, has $1.1 billion thanks to
her late husband Rene, founder of
PanAmSat Corp. with its 21 satellites.
And Norman Hascoe, 71, is worth $775
million from semiconductor materials
and investments.  
The only other 2000 listee to appear
earlier on Connecticut’s roll is Jay Walker,
founder in Norwalk of Priceline.com. At
44, he is the state’s youngest member, but
his wealth may be fleeting. His $1.6 bil-
lion is down sharply from the $4.1 billion
reported for 1999, as Priceline shares took
a drubbing. Worse still, the share price is
down another 80% just since July.    
Four state residents are new to the 2000
list. Sanford Weill, 67, of Citigroup
(Travelers), weighs in at $1.8 billion, up
from $1.1 billion last year, when he lived
in New York. George Lindemann, 64, who
earned his $1.2 billion building and sell-
ing companies, appeared on Florida’s list
last year. Vincent McMahon, 55, made 1.1
billion smackers from Smackdown and
the World Wrestling Federation of
Stamford, which he founded. And Martha
Stewart, 59, one of only six “self-made”
women on the Forbes list, reaped an even
billion going public. She has since
announced her departure from Westport
to New York. 
Since 1996, a total of 12 different
Connecticut residents have made the
Forbes list—that is, four others in addition
to the eight on the 2000 list.  What hap-
pened to the four dropouts?  One, Leona
Helmsley, left Greenwich for New York,
where she shows up on the list. The other
three didn’t make this year’s cutoff of
$725 million. 
Should the average state resident care
whether or not rich people live here?
There are some advantages. Rich people,
when more broadly defined from the
18 The Connecticut Economy Fall 2000
WILL MCEACHERN’S STRAWS IN THE WIND
Connecticut’s Wild Ride: Output Growth
Falters, Then Slowly Recovers
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Poverty Rate in Connecticut Climbed
Until Mid-Decade, Then Backed Off
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Source: Developed by The Connecticut Economy based on data
from the Bureau of Economic Analysis.
Source: Developed by The Connecticut Economy based on
data from the Bureau of the Census.Don't Forget to Visit Us On The Internet  -  http://www.lib.uconn.edu/ccea/quarterly.htm
Economy 
THE CONNECTICUT
A University of Connecticut Quarterly Review
Connecticut Travel
and Tourism Index
The overall index decreased
1.3% in the third quarter com-
pared to the same quarter the
year before.  The index consists
of hotel-motel revenues, hotel-
motel occupancy rates, atten-
dance at six major tourist
attractions, and traffic on five
tourist roads.
Hotel/Motel Rev. H 9.3%
Occupancy Rate P -3.4%
Attendance P -9.4%
Traffic P -1.6%
Overall P -1.3%
Job Totals
(not seasonally adjusted)
Weekly
Manufacturing
Hours
(not seasonally adjusted)
Service Jobs
(not seasonally adjusted)
Labor Force
(not seasonally adjusted)
Indexed so 1990 = 100
INDEX OF ECONOMIC INDICATORS Forbes list, pay the overwhelming share of
Connecticut’s income tax (as documented in
these pages each spring). Perhaps more
importantly, some of these people got rich
by creating jobs in Connecticut. 
This Is the Last Straw!
After 27 years at the University of
Connecticut, including seven years as Editor-
in-Chief of The Connecticut Economy, Will
McEachern has retired.  Will’s knack for
accurately taking the pulse of the state’s
economy, and his ability to interpret and
communicate these events with clarity and
humor, will be greatly missed.  Thanks,
Will, for your outstanding leadership.  We
wish you and Pat all the very best.  
Pat and Will McEachern, pictured at Will’s retirement bash, 
with the Director of the CCEA Fred Carstensen (center) 

Death Valley

http://cteconomy.uconn.edu/articles/WM_F2000.pdf

Death Valley

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Research Papers in Economics