State Economies Most Likely to Be Crippled by COVID-19

While Massachusetts is relatively insulated from the economic consequences of the pandemic — just 15.0% of workers are employed in high-risk industries, the sixth smallest share of any state — the severity of the COVID-19 outbreak in Massachusetts may curb economic activity in the state for a longer period than in most of the nation. As of June 1, there were 1,460 confirmed COVID-19 cases per 100,000 Massachusetts residents, the third highest infection rate of any state. Massachusetts has some of the strictest coronavirus restrictions in place, and consumer confidence is lower than in all but two other states, according to analysis from Morning Consult.

The unemployment rate in Massachusetts rose 12.1 percentage points from April 2019 to April 2020, the 10th largest increase of any state. The state’s unemployment rate now stands at 15.1%, more than the 14.7% national figure.

While workers in nearly all industries have been affected by the economic fallout from the COVID-19 pandemic, in some industries, workers have been hurt more than others. In New York, prior to the pandemic outbreak, a nation-leading 56% of employment was in industries deemed by Moody’s low risk to the effects of the pandemic, including financial activities, information, and health care.

However, New York has also been the hardest hit state by COVID-19, with 1,902 confirmed cases per 100,000 people, the highest of any state and considerably higher than the national figure of 547 cases per 100,000. Just over 25% of the state’s labor force has filed for unemployment since mid-march, one of the higher figures of any state.

From April 2019 to April 2020, Michigan’s unemployment rate rose by 18.4 percentage points, the third largest increase of any state. The state’s unemployment rate now stands at 22.7%, the second highest in the nation. Since March 15, 1.5 million state residents have applied for unemployment benefits, equivalent to 30.3% of the Michigan labor force — the seventh largest share of any state.

According to Moody’s, Michigan will face a 27.0% decline in state revenue through fiscal 2021, the ninth largest decrease of any state. And while Michigan has one of the largest rainy day funds of any state, it is not enough to protect the state against the financial shock. Moody’s projects Michigan will face a 15.9% budget shortfall in 2021, the eighth largest shortfall nationwide.

Nearly one in every five workers in Louisiana are employed in industries at high risk of slowdown in the wake of the pandemic. Partially as a result, the state’s unemployment rate stands at 14.5% — higher than in a majority of other states. That figure will likely only keep climbing as more than 651,000 Louisiana residents have filed for unemployment since mid-March, or over 31% of the state’s total workforce — the fifth highest share among states.

New Jersey is home to one of the worst COVID-19 outbreaks in the world. As of June 1, there were 1,806 confirmed COVID-19 cases per 100,000 state residents, the second highest infection rate of any state. There have been 132 deaths per 100,000, the highest death rate.

The delay in economic activity that will result from the severity of the pandemic in New Jersey is likely to result in a recession that the state is hardly prepared for. Moody’s projects the state will suffer a 27.2% decline in revenue through fiscal 2021, the eighth largest contraction of any state. And with a financial reserve equivalent to just 1.1% of annual expenditure — the sixth smallest rainy day fund of any state — New Jersey is projected to face a 26.2% budget shortfall in fiscal 2021, the second largest nationwide.