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The Coronavirus Economy Which Metros are Winning and Losing


This week, we’ll take a look at how U.S. city economies are faring during this worldwide pandemic.  You’ll see which are doing well, how that may be misleading, and also look at those places where unemployment has continued to rise.  Finally, I’ll tie this all together with some ideas about what it all means and where the economy goes from here.

And the winner is… Owensboro, Kentucky!  Owensboro is actually doing better in this pandemic economy.

Owensboro, KY

Wait, what?

That’s right.  Owensboro is the only one of the 401 U.S. major metropolitan areas and divisions to have a lower unemployment rate in June than it did in January.  Close behind Owensboro are more smallish metros in Kentucky, and then more small metropolitan areas around the country.

Metro areaDifferenceJan 2020June 2020
Owensboro, KY-0.2%4.4%4.2%
Elizabethtown-Fort Knox, KY0.3%4.7%5.0%
Lexington-Fayette, KY0.5%3.7%4.2%
Bowling Green, KY0.6%4.5%5.1%
Idaho Falls, ID0.6%3.0%3.6%

(Click here for a spreadsheet of unemployment stats for all 401 U.S. metro areas and divisions.)

At the other end of our ranking are the metro areas which have a much higher unemployment rate still lingering in June.  Atlantic City still had a 34% unemployment rate in June, and the top ten included other tourism destinations such as Maui, Las Vegas, and Orlando.

Mega-metros such as Los Angeles, New York, Boston, and Chicago also saw their unemployment rate remain much higher than at the beginning of the year.

Metro areaDifferenceJan 2020June 2020
Los Angeles-Long Beach, CA15.0%4.5%19.5%
New York-Jersey City-White Plains, NY-NJ14.5%3.8%18.3%
Las Vegas-Henderson-Paradise, NV14.1%3.9%18.0%
Orlando-Kissimmee-Sanford, FL13.5%3.0%16.5%
Chicago-Naperville-Arlington Heights, IL12.8%3.6%16.4%

The takeaway from looking at the difference in unemployment rates between January and June is that all places started the pandemic (in April) with high unemployment as restrictions went into effect.  Over the next few months (April to June), employment in the smaller metros recovered much faster than the largest metros.  By June, unemployment in the 40 largest metros was 236% larger than January, while in the 40 smallest areas the June unemployment was only 111% larger than January.

When we focus on the change in unemployment during the pandemic period so far (the months of April, May, and June), we find there are only 16 metros which have higher unemployment in June than January.  New York City’s jobless rate was 21% higher in June than in April (rising from 15.1% to 18.3%).

Interestingly, all but two of these metros with rising unemployment are in the Northeast region and include places such as New York, Boston, Philadelphia, Newark, Hartford, and Rochester.

 Change during pandemic (Apr - Jun)AprilMayJune
Worcester, MA-CT1.4%14.4%14.8%15.8%
Springfield, MA1.8%17.9%18.4%19.7%
New Haven-Milford, CT1.9%7.2%8.5%9.1%
Hartford-West Hartford-East Hartford, CT2.1%7.6%8.9%9.7%
Bridgeport-Stamford-Norwalk, CT2.3%8.0%9.7%10.3%
Boston, MA2.4%14.2%15.3%16.6%
New York-Jersey City-White Plains, NY-NJ3.2%15.1%16.3%18.3%

(Click here for a spreadsheet of unemployment stats for all 401 U.S. metro areas and divisions.)
 

Here’s what happened, and what it tells us about the future:

The Coronavirus did not hit the entire U.S. at the same time.  Early infections were restricted to a few large cities, most notably New York.  Severe restrictions were enacted nationwide, even though most of the country had not yet been infected.  With a temporary absence of Covid-19 cases, most places started reopening, particularly the smaller and less densely populated metropolitan areas.  Their unemployment rate went down because they were not yet visited by the pandemic.

Meanwhile, the large cities which were first hit by the virus were still suffering from the effects, even in June.  Their unemployment was still rising.

These larger cities provide a sobering cautionary glimpse into what the rest of 2020 might look like throughout the United States, as the pandemic continues to spread to all cities and rural areas.  The economies of the early Coronavirus cities are not improving. Rather, they are sinking deeper with each month and this might be the same course for most cities as the virus becomes established.

Here’s my prediction and my advice.

As government stimulus and benefit programs dry up, the weather gets colder, more businesses shut down and furloughs become layoffs, our economy will get much worse before it gets better again. I’m hearing the same message from economists, businesspersons, and even the general public (consumer confidence is sinking.)

Save your money and build up some financial reserves. Minimize your risk. With luck and planning, you could come out of this in a good position to take advantage of the opportunities that are bound to surface after the storm. (It’s no accident that the Roaring Twenties happened right after WWI and the Spanish Flu pandemic.)

I hope I’m wrong and the effects of this pandemic will start to subside but I’d rather be safe than sorry.

Take care.  Wear a mask to stay healthy and help us all beat this thing.

Best always,

Bert Sperling

Methodology

The unemployment rate comes from the LAUS (Local Area Unemployment Statistics) which is produced monthly by the Bureau of Labor Statistics.

The concepts and definitions underlying LAUS data are derived from the Current Population Survey (CPS), the household survey that is the source of the national unemployment rate.

A 30-year compilation of unemployment and job growth for every state, metro, county, city, and zip code is available from BestPlaces.

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