Why New York’s in a Depression and Texas Isn’t Reply

The “culture wars” are largely an intra-class rivalry within the middle class, but class divisions are rapidly becoming the “new sectionalism” pitting poor regions against affluent ones and those with declining economies against those with rising ones

By Conor Sen

Bloomberg

In the first few months of the Covid-19 pandemic, the conventional wisdom was that economic recovery hinged on controlling the disease. For a while, that appeared to be the case, with the economies of most states feeling similar levels of pain as consumers, businesses and public officials took measures to slow the spread of the virus.

But as August state employment data show, recovery is happening faster in states whose economies are less tied to in-person services, not states that have performed better on controlling the virus. As we await the rollout of vaccines, we should expect better virus control to improve the economic fortunes of any community. But we should also expect states with economies that rely more on logistics, manufacturing and construction to outperform economies heavier on services, no matter what their public health performance is.

The best way to see this is to compare the unemployment rates of states that have done some of the best and worst jobs of containing the spread of the virus over the past couple of months.

Since the pandemic began, states in the Northeast have consistently done the best job of containing the virus through a mix of policy measures and adherence to wearing masks (and possibly, in the case of a few hard-hit communities, partial herd immunity). Yet of the 10 states with unemployment north of 10% in August, half are in the Northeast — Massachusetts, New Jersey, New York, Pennsylvania, and Rhode Island.

When thinking about states that did a poorer job of containing the virus over the summer, those in the Sun Belt such as Arizona, Texas, Florida, and Georgia come to mind. All experienced a surge in cases in June and July that strained hospital capacity, and some had to reverse course on economic reopening plans and take measures such as shutting or restricting the operations of bars and indoor restaurants. Yet in August, Arizona’s unemployment rate was 5.9%, Florida’s was 7.4%, Georgia’s was 5.6%, and Texas’ was 6.8%.

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