Special Report

State Economies Hit Hardest By the COVID-19 Recession

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25. Kentucky
> 1-yr. GDP change: -3.7%
> 2020 GDP: $183.8 billion (22nd smallest)
> Fastest shrinking industry, 2019-2020: Arts, entertainment, recreation, accommodation, and food services (-22.0%)
> Fastest growing industry, 2019-2020: Agriculture, forestry, fishing and hunting (+9.8%)
> April 2021 unemployment: 4.7% (21st lowest)

Economic output in Kentucky fell from $190.8 billion in 2019 to $183.8 billion in 2020. The 3.7% economic contraction was steeper than it was in about half of all states. Industries like arts, entertainment, recreation, accommodation, and food services, educational services, and transportation and warehousing were considerable drags on growth.

Not all sectors in Kentucky contracted in the last year, however. The state’s agriculture industry expanded by nearly 10% in 2020, and the utilities sector expanded by nearly 9%.

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24. Minnesota
> 1-yr. GDP change: -3.7%
> 2020 GDP: $328.5 billion (17th largest)
> Fastest shrinking industry, 2019-2020: Arts, entertainment, recreation, accommodation, and food services (-26.1%)
> Fastest growing industry, 2019-2020: Agriculture, forestry, fishing and hunting (+15.6%)
> April 2021 unemployment: 4.1% (14th lowest)

Minnesota’s annual GDP stands at $328.5 billion — 3.7% lower than it was in 2019. As was the case in many states, arts, entertainment, recreation, accommodation, and food services was the fastest shrinking industry in Minnesota in 2020. Over the course of the year, as nonessential travel effectively ground to a halt in much of the country, the sector contracted by 26.1% in the state, posing a 0.8 percentage point drag on the state’s GDP growth.

As the state’s economy contracted, employment fell at an even faster rate. There were 207,000 fewer people working in Minnesota in 2020 than in 2019, a 6.9% reduction in jobs. Nationwide, employment fell by just 5.8% last year. Still, Minnesota’s job market is relatively strong with just a 4.1% unemployment rate, 2 percentage points below the 6.1% national rate.

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23. Massachusetts
> 1-yr. GDP change: -3.8%
> 2020 GDP: $500.2 billion (11th largest)
> Fastest shrinking industry, 2019-2020: Arts, entertainment, recreation, accommodation, and food services (-30.1%)
> Fastest growing industry, 2019-2020: Agriculture, forestry, fishing and hunting (+10.4%)
> April 2021 unemployment: 6.4% (14th highest)

Massachusetts reported a 3.8% economic contraction in 2020, slightly larger than the comparable national GDP decline. The state’s arts, entertainment, recreation, accommodation, and food services sector contracted by over 30% last year, accounting for a 1.2 percentage point contraction in overall GDP. Meanwhile, no sector contributed more to overall economic growth in the state than information, which contributed 0.1 percentage points to GDP growth.

While Massachusetts’ economic decline is close to the median among all states, job losses in the state were far more pronounced. There were an average of 333,000 fewer people working in Massachusetts in 2020 than in 2019 — a 9.0% decline. Unemployment in the state stands at 6.5%, slightly higher than the 6.1% U.S. jobless rate.

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22. Delaware
> 1-yr. GDP change: -3.9%
> 2020 GDP: $61.8 billion (9th smallest)
> Fastest shrinking industry, 2019-2020: Arts, entertainment, recreation, accommodation, and food services (-26.3%)
> Fastest growing industry, 2019-2020: Utilities (+5.9%)
> April 2021 unemployment: 6.4% (15th highest)

Delaware’s economy contracted by 3.9% in 2020. Like many other states, the fastest growing industry in Delaware was utilities, which expanded by 5.9%, and the fastest shrinking industry was arts, entertainment, recreation, accommodation, and food services, which contracted by 26.3%.

Just as Delaware’s economic contraction was closely in line with the national contraction, so too were job losses. Employment in the state fell by 6.0% in the state in 2020, compared to the national 5.8% employment decline. Unemployment in Delaware stands at 6.4%, slightly higher than the 6.1% U.S. unemployment rate.

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21. Ohio
> 1-yr. GDP change: -4.0%
> 2020 GDP: $591.1 billion (7th largest)
> Fastest shrinking industry, 2019-2020: Arts, entertainment, recreation, accommodation, and food services (-27.8%)
> Fastest growing industry, 2019-2020: Agriculture, forestry, fishing and hunting (+13.9%)
> April 2021 unemployment: 4.7% (21st lowest)

Ohio is one of 21 states to report an economic contraction of 4% or greater in 2020. The state’s arts, entertainment, recreation, accommodation, and food services, manufacturing, and educational services sectors alone accounted for over 2 percentage points of GDP decline.

Not all sectors contracted in Ohio in 2020, however. The state’s finance, insurance, and real estate, agriculture, and utilities sectors each contributed 0.1 percentage points to economic growth.