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With so many eyes upon the battleground states in the US general
election, here is a brief look at the current condition of state
economies in some of the most frequently cited states. While the
states vary by geography, primary industries, population growth,
and other major factors, more recently the global pandemic has been
an overriding theme.
The recent performance of state economies, measured by changes
in employment and by unemployment rates, has been a function of
COVID-19 infection rates, timing of any infection "spikes", policy
reactions to COVID-19, and states' primary industries. Over time,
the duration of restrictions and mix of industries have contributed
to broad differences in how employment has changed since February,
the last full month prior to widespread reporting of COVID-19 in
the United States. An overarching theme is that industries related
to travel and tourism (especially places usually reached by air),
plus dining outside the home were the most affected and will
continue to be until effective treatments and/or widespread
vaccinations are available.
Michigan, where manufacturing of automobiles
and other durable goods remains a dominant industry, was hit early
by widespread factory shutdowns in mid-March that were eased
beginning in mid-May. Factory jobs have been steadily coming back
but remain below peak levels, while restrictions on summer tourism
and dining out have limited recovery in leisure and hospitality.
Nevada continues to suffer from high rates of
unemployment due to limits on casinos, concerts, and other
entertainment activity, plus the fact that so many visitors tend to
travel by air rather than by ground.
Florida's tourism industry, most visibly its
theme parks, has struggled while other parts of the state economy
have recovered relatively well. Pennsylvania's
employment losses stem from heavy losses of tourist business,
including international arrivals visiting the Philadelphia area,
and ongoing restrictions on dining out and crowd size.
While some states, mostly located along the East and West
Coasts, made the news in March and April for their early outbreaks,
no state has been spared effects of the disease.
Florida and Georgia are among the
southern states that got in on the act when beach-going season
heated up, with the virus also reaching more rural and small-town
portions of the country despite their relatively low population
densities. The return of students in August also created conditions
that were ripe for rapid spread in college towns, some of which had
been mostly unaffected up to then.
At this point, all of the battleground states have monthly
employment at least 4% below the February level, with Michigan
having the most ground to make up at -10.1%. While many states have
shown marked improvement from April lows, from here job gains will
become more difficult to achieve. Even without lockdowns or other
official restrictions, further job gains will be sluggish until a
significant increase in travel and tourism activity (including a
return of international travelers) occurs, along with consumer
confidence that being in crowded restaurants and entertainment
venues is safe. The move toward remote office work also creates
question marks for the nature of the recovery, with many
service-sector jobs tied to the presence of droves of office
workers in urban environments.
Posted 04 November 2020 by Tom Jackson, Principal Economist - US Regional Economic Service