State Economies Hit Hardest by COVID-19

Connecticut, like every other state in the New England region, had a greater one-year GDP decline than the national decline. The state’s Q3 2020 GDP was $242.8 billion, 3.3% lower than its Q3 2019 GDP of $251.0 billion. For context, the overall U.S. GDP fell by 2.8% during that same time period.

Like the U.S. as a whole, Connecticut’s GDP declined sharply from Q1 to Q2 2020 as schools and businesses began shutting down in March, but it recovered somewhat by Q3. Yet the state’s job market has struggled to keep pace with the nation’s economic improvement towards the end of 2020. Connecticut’s unemployment rate increased from 6.1% in October to 8.2% in November, even as the U.S. unemployment rate decreased from 6.9% to 6.7%.

Massachusetts had among the earliest and strictest COVID-19 travel and social distancing restrictions in the country. With tourism ground nearly to a halt, the economic output of arts, entertainment, and recreation was more than cut in half — declining from over $6.1 billion in Q3 2019 to less than $2.8 billion in Q3 2020. It was just one of the numerous Massachusetts sectors that saw a decline in GDP over the past year, leading to an overall 3.3% GDP drop.

Along with the drop in GDP, Massachusetts had one of the largest declines in total employment over that time. There were more than 327,000 fewer people working in the state in Q3 2020 than in Q3 2019, an 8.8% decline — the seventh sharpest drop among all states.

State economies in the Northeast were hit especially hard by the pandemic in the past year, and Maine was not spared. Maine’s economic output contracted by 3.4% over the past year, with the state’s arts, entertainment, and recreation industry shrinking by nearly 50%. Maine’s total economic output in Q3 of 2020 totaled just $57.0 billion, the lowest level since 2017.

Job losses have accompanied economic decline in Maine. Overall employment declined by 4.6%, or about 31,000 jobs, from September 2019 to September 2020.

North Dakota is one of the largest oil-producing states in the country, with its mining, quarrying, and oil and gas extraction sector accounting for $8.5 billion-worth of economic output in the third quarter of 2019, or over 15% of the state’s $53.9 billion GDP for that quarter. In the third quarter of 2020, the output of this sector fell by more than 21% to $6.7 billion.

This $1.9 billion decline in the mining, quarrying, and oil and gas extraction sector actually exceeded North Dakota’s overall GDP contraction. The state’s overall economic output shrank by $1.8 billion — from $53.9 billion in Q3 2019 to $52.1 billion in Q3 2020. The extraction sector’s losses were offset by growth in sectors like agriculture, management, educational services, and government.

Oil and gas extraction is one of the largest industries in Texas — and it took a substantial hit during the COVID-19 pandemic. Due in large part to reduced demand for oil and gas, Texas’s oil and gas extraction industry shrank by 18.7% in the past year. The reduced output in one of the state’s economic pillars contributed to a statewide 3.4% economic contraction over the same period.

The economic decline has sent unemployment soaring in the Lone Star state. Texas’ 8.1% jobless rate for November 2020 is among the highest of any state and more than double the 3.5% rate of one year prior.