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Thursday, June 4, 2020

Florida and Nevada could be hardest hit by coronavirus economic shock: study

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WASHINGTON (Reuters) – Florida beaches have been crowded with partying students as the coronavirus crisis escalates, and the Republican governor has been slow to impose social distancing in a tourism-dependent economy.

FILE PHOTO: Surfers surf the waves despite the closure of a Pinellas County beach due to restrictions imposed by Coronavirus Disease (COVID-19) in Treasure Island, Florida, United States, April 1, 2020 REUTERS / Eve Edelheit

This could come back to haunt the U.S. state – not just in the form of an explosive case load. Florida is among the states most vulnerable to the economic shock caused by the pandemic, according to a recent study published by Oxford Economics. ((reut.rs/34cmzs3)

Oxford ranked the 50 US states and Washington DC using 10 measures that, according to its economists, could make a local economy more vulnerable, including the share of the population over 65, dependence on retail sales and the importance of the tourism industry.

According to Oxford, Maine, with its proportionately older population and relatively large number of the self-employed or those working in small businesses, is considered the most vulnerable state economy. Nevada, with its massive casino-based tourism industry, was second, while rural Vermont was third.

Florida is the only heavily populated state near the top of the list, with a relatively large share of its 21 million residents over the age of 65, and an economy that relies relatively on retail sales and tourism.

The state’s COVID-19 caseload exceeded 10,000 last week and it adds 1,000 cases a day. Governor Ron DeSantis imposed a statewide “stay at home” order that came into effect Friday, weeks after some US states.

“We see what’s going on in New York now, we see people dying,” Florida senator Rick Scott told Fox News Channel on Saturday. “People are taking this very seriously now.”

States like New York and California that have experienced the heaviest COVID-19 loads to date may in fact be among the toughest economically, according to the Oxford team.

“Lockdown and containment are the main determinants of the economic impacts of the first cycle of the coronavirus, but structural economic vulnerabilities determine the severity of the impacts of the second cycle,” wrote Oxford chief economist Oren Klachkin. Long-term results may depend on the strength of local government budgets and health systems.

Economists are struggling to cope with the potential consequences of the crisis as it continues to deepen. Businesses cut more than 700,000 jobs from payroll in March, a measure probably underestimated by the rapid rise in unemployment: more than 6 million people filed for unemployment benefits in the week ended March 28 .

President Donald Trump first downplayed the dangers of the virus and did not quickly recommend health orders nationwide. Local governments, which vary widely in their finances and ability to cope, have had different initial responses to the threat, a fact that could shape the end result of the crisis at the national level.

The situation has produced a rapid flowering of research on the pandemic economy, with most studies finding that tighter health measures taken early lead to deeper but shorter economic downturns and faster recoveries.

There are political and economic implications.

Florida, for example, is an important battleground state in the US electoral system, and the perceived success or failure of efforts to control the virus and support local businesses and households could influence the chances of re-election from Trump.

American regional economist IHS Markit Karl Kuykendall also ranked Florida as one of the most vulnerable states, using a different methodology focused on estimated declines in employment and economic output. The state could lose about 8% of its jobs by the end of the year, he calculated.

Pennsylvania’s Michigan “rust belt” industrial states, also politically important ridings that launched the 2016 race for Trump, are in line to strike similar job hits, Kuykendall said.

Personal finance site WalletHub.com used a broader set of measures, including homework and local financial strength, for another ranking.

Florida is in the middle of this pack because of its relatively small number of small businesses and stronger public finances, WalletHub found. He said Louisiana was the most “exposed”, with Maine and Nevada also top the list. Among the most populous states, Pennsylvania and Illinois were in the top 10 of WalletHub.

None of the studies reported on the assistance given to households, businesses and local governments from the $ 2.3 trillion emergency rescue package approved by Congress in late March, or the wide range of programs put in place. in place by the Federal Reserve.

The combined objective of these efforts is to offset the economic impact of the virus. Officials are now focusing on whether aid can reach its importance quickly enough.

Report by Howard Schneider: edited by Heather Timmons and Daniel Wallis

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