Special Report

State Economies Most Likely to Be Crippled by COVID-19

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30. North Carolina
> Workforce in high-risk industries: 17.6% of total (23rd highest)
> Unemployment claims since mid-March: 980,705 (19.4% of workforce — 21st lowest)
> COVID cases as of June 1, 2020: 29,263 (282 per 100,000 people — 19th lowest)
> COVID deaths as of June 1, 2020: 898 (9 per 100,000 people — 17th lowest)
> April unemployment rate: 12.2% (21st lowest)

North Carolina ranks towards the middle of all states in most measures of COVID-19-related recession risks. Some 17.6% of the North Carolina workforce is employed in industries identified by Moody’s as high-risk, roughly in line with the 17.7% national figure. Similarly, as of April 2020, North Carolina’s unemployment rate of 12.2% was below the 14.7% national rate.

The state’s biggest weak point may be its underfunded rainy day fund. Nearly every state maintains a revenue stabilization fund to help limit an economic fallout resulting from a recession or another financial crisis. At the end of fiscal 2019, North Carolina’s rainy day fund amounted to just 5.1% of annual expenditure, one of the smallest funding ratios of any state.

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29. Connecticut
> Workforce in high-risk industries: 14.2% of total (the lowest)
> Unemployment claims since mid-March: 370,367 (19.6% of workforce — 23rd lowest)
> COVID cases as of June 1, 2020: 42,743 (1,196 per 100,000 people — 5th highest)
> COVID deaths as of June 1, 2020: 3,970 (111 per 100,000 people — 3rd highest)
> April unemployment rate: 7.9% (the lowest)

In Connecticut, just 14.2% of workers are employed in industries identified by Moody’s as high-risk because of the coronavirus pandemic, the smallest share of any state. Likely partially as a result, just 7.9% of the state’s labor force was unemployed as of April 2020, the lowest unemployment rate nationwide and nearly half the national unemployment rate of 14.7%.

While Connecticut is relatively well poised to weather the immediate economic effects of a coronavirus-driven recession, the magnitude and spread of COVID-19 in the state may dampen economic activity in the long run. As of June 1, there were 1,196 confirmed COVID-19 cases per 100,000 state residents, the fifth highest infection rate of any state. According to a survey by market research firm Morning Consult, consumer confidence is currently worse in Connecticut than in all but three other states.

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28. Arizona
> Workforce in high-risk industries: 19.3% of total (15th highest)
> Unemployment claims since mid-March: 607,099 (17.3% of workforce — 12th lowest)
> COVID cases as of June 1, 2020: 20,123 (281 per 100,000 people — 18th lowest)
> COVID deaths as of June 1, 2020: 917 (13 per 100,000 people — 24th highest)
> April unemployment rate: 12.6% (22nd lowest)

An estimated 19.3% of workers in Arizona are employed in industries identified by Moody’s as high-risk due to the coronavirus pandemic — such as leisure and hospitality, employment services, and mining — slightly more than the 17.7% national figure.

While Arizona’s industry composition puts it at a somewhat higher risk of a COVID-19-driven recession relative to other states, the state fares well in a number of other measures of exposure. The state’s unemployment rate stands at 12.6%, less than the national figure of 14.7%. Similarly, initial unemployment claims since March 15, 2020 constitute 17.3% of the Arizona labor force, a smaller percentage than in 38 other states.

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27. West Virginia
> Workforce in high-risk industries: 18.2% of total (20th highest)
> Unemployment claims since mid-March: 152,626 (19.3% of workforce — 20th lowest)
> COVID cases as of June 1, 2020: 1,970 (109 per 100,000 people — 5th lowest)
> COVID deaths as of June 1, 2020: 76 (4 per 100,000 people — 7th lowest)
> April unemployment rate: 15.2% (15th highest)

In West Virginia, 3.1% of the workforce is employed in the mining, oil and gas sector, the fifth largest share of any state. Oil was one of the first sectors to be negatively impacted by reduced consumer demand during the coronavirus pandemic and will continue to suffer during the economic downturn. In total, 18.2% of workers in West Virginia are employed in high-risk industries, slightly more than the 17.7% national figure.

Moody’s projects that the economic slowdown in West Virginia will result in a 30.2% decline in state revenue through fiscal 2021. And while the state’s well-funded rainy day fund — the sixth largest nationwide relative to annual expenditure — will act as a cushion, Moody’s projects the state will ultimately need to cut its budget by some 14.4% in 2021 in order to balance the budget.

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26. Wyoming
> Workforce in high-risk industries: 25.5% of total (3rd highest)
> Unemployment claims since mid-March: 39,956 (13.9% of workforce — 5th lowest)
> COVID cases as of June 1, 2020: 910 (158 per 100,000 people — 7th lowest)
> COVID deaths as of June 1, 2020: 17 (3 per 100,000 people — 4th lowest)
> April unemployment rate: 9.2% (5th lowest)

While Wyoming has one of the lowest COVID-19 infection rates nationwide, the state’s dependence on oil makes it particularly vulnerable to the effects of a global economic slowdown. Some 7.6% of workers are employed in the mining, oil and gas sector, the largest share nationwide. In total, 25.5% of the workforce is employed in industries classified as high-risk due to the coronavirus pandemic, the third largest share of any state.

While Moody’s predicts a majority of states will have to implement budget cuts in fiscal 2021 as a result of the pandemic, Wyoming’s well-funded rainy day fund will likely cushion it from any serious fiscal shock. At the end of 2019, Wyoming’s rainy day fund was equivalent to 138.3% of annual expenditure, the highest funded ratio of any state.

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