Some States Are Recovering Faster Than Others — Here’s Why

It seems that all we hear when we turn on the TV, open up the newspaper or log on to a news website is bad economic news because of the COVID-19 pandemic. And to be fair, the COVID-19 pandemic has caused a lot of bad news – especially from an economic perspective as millions of Americans have lost their jobs as business slowed or came to a halt. While the pandemic is only about six months old and is expected to last for several more months before life gets back to some resemblance of normal, there is good news to share – and this good news involves recovery already occurring within many states.

For instance, in Nebraska, the unemployment rate is below 5 percent. In Rhode Island, small business is going well. In Maine, the real estate industry specifically is surging. In fact, these states’ economies are humming along at about 90 percent of what they were pre-pandemic. Obviously, these economies still have a ways to go before they’re fully back to normal, but it’s a stark contrast from other states that are still scuffling. Take Hawaii, for instance, a state with an economy running at less than 60 percent of what it was pre-pandemic. New York is another one that is struggling, with its economy only about 75 percent active.

So why are some states’ economies doing better than others? It goes back to what many medical experts are saying: In order to have a strong economic bounce back, we need to get control over the virus. It’s no coincidence that the states that are bouncing back better than others are those that have gotten control of the virus.

The ‘Back to Normal’ Index

Moody Analytics has recently put together a Back to Normal Index, which ranks the states that have seen the biggest bounce back from pandemic-induced shutdowns. While the No. 1 state on the list – Maine – recorded a small number of coronavirus cases, others on the list are examples of states that have gained control of the virus. Take Michigan for example, which clocks in at No. 10 on the Back to Normal Index. Though Michigan has recorded more than 100,000 known cases, aggressive mitigation efforts in the early days of the pandemic have Michigan’s economy now operating at 86 percent compared to pre-pandemic levels.

Conversely, Louisiana had the highest infection rate of any state in the country – and the state’s economy is still reeling. Because of a failure to get the virus under control, Louisiana’s economy is only operating at about 73 percent compared to pre-pandemic levels.

Other Factors

While virus containment is important to economic rebound, there are other factors that have aided (or hampered) certain states in their respective recoveries. For instance:

• Rural areas have fared better than urban ones, for the obvious reason of easier social distancing.
• States that rely on tourism have suffered, as Americans are traveling less often.
• States that reopened too soon have not seen sustained economic growth – just temporary upticks.