Although that means they still have a way to go before they’ve recovered completely, these states’ rebounds are among the strongest in the country. They stand in contrast to places like Hawaii, where the economy is sputtering at only 57% of where it was in early March, and even New York, which is operating at 73% of its pre-pandemic activity.
Why are some states recovering so much faster than others? Moody’s Analytics economists Mark Zandi, Dante DeAntonio and Matt Colyar dug into the data, and here’s what they found.
Early in the pandemic, economists repeatedly stressed one point: The trajectory of the virus is ultimately the biggest factor that will determine both the severity of the economic crisis and the speed of the rebound.
We’re now seeing that play out across the country.
Rural places are recovering faster
When social-distancing orders are in effect, having more space to roam is definitely an advantage.
Rural states like Idaho, South Dakota and Nebraska boast stronger rebounds than densely populated states like New York, Texas and California, which rank among the bottom 15 states on the Back-to-Normal Index.
Big cities have faced steeper challenges in curtailing the virus. Millions of commuters aren’t riding public transit anymore and entire offices have gone dark. That has hurt businesses that cater to office workers in urban centers.
Early reopenings didn’t help
Real estate is hot in the Northeast
New England states have also fared better than other parts of the country because they’ve benefited from a hot real estate market this summer.
Economists acknowledge this boom could be seasonal. Summer is typically a peak time for real estate in northern states, and it’s unclear if colder weather could slow the housing market in the months ahead.
A bad time to be reliant on tourism
One state has been harder hit by the travel slump than any other: Hawaii. It’s heavily dependent on tourism, and as a result, it’s the lowest-ranking state on the Back-to-Normal Index.
Getting back to ‘normal’
Looking ahead, Moody’s Analytics economists say the recovery will continue to depend on how state and local governments act to prevent a resurgence in the virus.
“If a resurgence is strong enough across large parts of the country to incite mitigation efforts like those imposed in March and April, the economy would almost certainly double dip into recession,” DeAntonio and Colyar say. “However, if rising case counts are localized or mitigation efforts are more moderate, as we saw in June and July, then it is possible the economy would avoid a double-dip recession and instead tread water for a longer period of time.”