Special Report

State Economies Hit Hardest By the COVID-19 Recession

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30. Indiana
> 1-yr. GDP change: -3.1%
> 2020 GDP: $327.3 billion (18th largest)
> Fastest shrinking industry, 2019-2020: Arts, entertainment, recreation, accommodation, and food services (-21.2%)
> Fastest growing industry, 2019-2020: Agriculture, forestry, fishing and hunting (+45.7%)
> April 2021 unemployment: 3.9% (12th lowest)

Economic output in Indiana fell from $337.6 billion in 2019 to $327.3 billion in 2020. The 3.1% economic contraction was not as steep as it was in slightly over half of all states. Industries like arts, entertainment, recreation, accommodation, and food services and manufacturing were considerable drags on growth.

However, the overall damage to economic growth was mitigated by the state’s agricultural industry, which surged by 45.7%, contributing 0.7 percentage points to overall GDP growth. Indiana’s job market remains relatively strong despire reporting a 5.5% drop in employment last year. As of April, 3.9% of the state’s labor force were unemployed, well below the 6.1% U.S. jobless rate.

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29. New Mexico
> 1-yr. GDP change: -3.1%
> 2020 GDP: $95.7 billion (14th smallest)
> Fastest shrinking industry, 2019-2020: Arts, entertainment, recreation, accommodation, and food services (-20.1%)
> Fastest growing industry, 2019-2020: Utilities (+7.3%)
> April 2021 unemployment: 8.2% (3rd highest)

Montana’s economy contracted by 3.1%, or $3.0 billion, in 2020. Two of the largest drags on growth in the state were the arts, entertainment, recreation, accommodation, and food services, and educational services sectors. The largest detractor from growth, however, was the state’s resource extraction sector. The state is a major petroleum producer, and though it was one of only three states to report an increase in production in 2020, oil prices cratered during the pandemic. Likely partially as a result, New Mexico’s mining, quarrying, and oil and gas extraction sector dragged the state’s overall GDP down by 2.1 percentage points.

Resource extraction also shed more jobs than any other industry in New Mexico in 2020 as overall employment in the sector declined by 23.6%. The state’s information and leisure and hospitality sectors also shed about one-fifth of their workforce.

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28. Texas
> 1-yr. GDP change: -3.5%
> 2020 GDP: $1.7 trillion (2nd largest)
> Fastest shrinking industry, 2019-2020: Agriculture, forestry, fishing and hunting (-22.2%)
> Fastest growing industry, 2019-2020: Finance, insurance, real estate, rental, and leasing (+0.1%)
> April 2021 unemployment: 6.7% (11th highest)

Texas’ economy contracted by 3.5% in 2020, in line with the comparable GDP decline nationwide. Texas is far and away the top oil-producing state, and as nonessential travel ground to a halt during the pandemic, demand for petroleum plummeted, putting pressure on oil prices. Though several industries in Texas contracted more than resource extraction, due to the industry’s size, it posed the largest drag on overall economic growth, detracting 1.7 percentage points from the state’s GDP.

Resource extraction also shed more jobs than any other industry in Texas in 2020, as overall employment in the sector declined by 22.8%. Partially as a result, unemployment in Texas stands at 6.7%, considerably higher than the 6.1% U.S. jobless rate.

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27. North Dakota
> 1-yr. GDP change: -3.5%
> 2020 GDP: $52.0 billion (7th smallest)
> Fastest shrinking industry, 2019-2020: Arts, entertainment, recreation, accommodation, and food services (-21.5%)
> Fastest growing industry, 2019-2020: Agriculture, forestry, fishing and hunting (+24.0%)
> April 2021 unemployment: 4.2% (15th lowest)

The only two sectors in North Dakota to report growth were agriculture and utilities, which expanded by 24.0% and 2.2%, respectively. With most industries contracting, North Dakota’s economic output fell by $1.9 billion, or 3.5%, in 2020.

North Dakota is the second largest producer of crude oil in the United States, and like other major oil-producing states, economic decline in the state in 2020 was tied largely to the sector’s slowdown. As the pandemic slashed demand for fossil fuels, global oil prices cratered. Partially as a result, North Dakota’s resource extraction industry contracted by 14.5% in 2020. While other industries in the state reported larger output declines, resource extraction was the largest drag on growth in the state, detracting 2.3 percentage points from GDP.

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26. Missouri
> 1-yr. GDP change: -3.6%
> 2020 GDP: $277.4 billion (22nd largest)
> Fastest shrinking industry, 2019-2020: Arts, entertainment, recreation, accommodation, and food services (-22.6%)
> Fastest growing industry, 2019-2020: Agriculture, forestry, fishing and hunting (+3.4%)
> April 2021 unemployment: 4.1% (14th lowest)

Missouri’s economy contracted by 3.6% in 2020, closely in line with the national GDP decline and near the median among all states. The largest drags on growth in the state were the arts, entertainment, recreation, accommodation, and food services and manufacturing sectors, which detracted a combined 1.5 percentage points from GDP.

As Missouri’s economy contracted, the state shed some 141,000 jobs, or 4.8% of its workforce. Still, the state’s unemployment rate of 4.1% is considerably lower than the 6.1% national rate.