Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
There will be a wide variation in state-level performance this
year with tourism-dependent states seeing the largest immediate
declines. This will hit Nevada and
Florida the hardest, with employment falling 9.8%
and 7.9%, respectively, by the end of this year. Temporary
shutdowns among resorts and casinos will lead to a dramatic decline
in the second quarter in these states with total employment
plunging more than 30% (annualized) in Nevada and 20% in
Florida.
Manufacturing-reliant states
Manufacturing-intensive areas in the Midwest
and the generally slower growing and densely populated
Northeast will also be among the states with the
deepest employment declines this year. Most sectors of
manufacturing (with the exception of food and other consumer
staples) will be affected by plant shutdowns due to reduced demand
along with virus concerns.
Energy-reliant states
Texas, North Dakota, New Mexico, Oklahoma, and
Alaska stand to endure significant economic losses
as mining output shrinks over 2020 and 2021. In the second quarter
of 2020, the negative impacts resulting from virus mitigation
efforts will dominate the economic picture even in the major
oil-producing states. The impact from lower mining activity will
become more noticeable later in 2020 and into 2021. As broader
economic conditions start to improve in 2021, oil-producing states
will see a slower rebound as they continue to grapple with weakness
in the oil patch. Economic losses related to oil will be much more
pronounced in gross state product (GSP) than employment given the
high output nature of the industry. In Texas, for example, the
natural resources and mining sector accounts for 15% of real GSP
but only 2% of jobs.
Impact on rural states
On the other end of the spectrum, South Dakota,
Nebraska, and Iowa will be the
most resilient given their smaller share of sectors most exposed to
COVID-19 disruption and rural landscape, which naturally helps with
social distancing.
Metro-area impact
There will not be a direct link between the regional
distribution of COVID-19 caseloads and the economic damage
associated with the virus. The specific economic structure of the
state or metro, along with state and local policies around
containment, will generally be most impactful. However, there will
be situations where caseloads affect our outlook, with New
York serving as a prime example. It is grappling with an
outsized number of cases stemming from New York
City and will endure greater economic disruption as a
result. Densely populated urban areas are naturally at most risk
for caseload escalation.
Outlook
We should not overlook that fact that the economic disruption
from COVID-19 will eventually pass, with our current forecast
calling for employment and output to rise over 2021. We are not
expecting a "V" shaped recovery, in which economic activity snaps
right back soon after the outbreak is under control and people can
return to work. It will take time for travel activity to rebound
and consumer confidence and spending to return to full health. The
recovery will also depend upon the extent of financial damage
caused by layoffs and shutdowns, which could lead to longer-term
losses in demand. Nevertheless, the states and metros hit hardest
will generally be among the fastest growing over the ensuing
recovery as activity that fell most sharply during the downturn has
the greatest room for growth as conditions normalize.
Posted 01 April 2020 by Karl Kuykendall, Associate Director, US Regional Economic Service, IHS Markit
