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Employers laid off employees at the fastest clip in U.S. History at the onset of the pandemic, with the unemployment rate soaring from 3.5% in February to 14.7% in April. But as states reopen, that rate had fallen to 11.1% by June.
While a dropping jobless rate points to an improving economy, it also makes it clear we aren’t seeing the much-hoped-for V-shaped recovery—when an economy recovers nearly as fast as it contracted.
But dig a bit deeper and it’s clear that not all recoveries are proceeding equally. They vary immensely by state. In Kentucky, the seasonally adjusted jobless rate soared from 4.2% in February to 16.6% in April, according to the U.S. Bureau of Labor Statistics. But as Gov. Andrew Beshear reopened the Bluegrass State’s economy, the jobless rate sunk to 4.3% by June—the lowest in the nation. That’s a textbook V-shaped recovery.
The swift recovery in Kentucky even caught its state officials by surprise. In May the state projected a $457 million general fund shortfall; however, it ended the fiscal year in June with a $177.5 million surplus. It helped that Kentucky doesn’t rely heavily on industries like leisure and hospitality that were decimated by the pandemic.
Other more rural states like Utah (5.1%), Idaho (5.6%), and North Dakota (6.1%) have jobless rates that also indicate V-shaped recoveries.
Then there are places that have seen little to no recovery. The jobless rate in New Jersey and Massachusetts were at 16.3% and 16.2%, respectively, in April. In June, the jobless rate was 16.6% in New Jersey and 17.4% in Massachusetts—the two highest rates in the nation. New York was the third highest at 15.7% in June. Those rates are on par with the Great Depression era, which saw an average of a 17% jobless rate during the 1930s.
Northeast states like New York, New Jersey, and Massachusetts were among the early epicenters of the virus and are reopening their economies at much slower rates. On the flip side, the Northeast is not seeing COVID-19 cases spike like other regions.
While states like Kentucky and Utah see V-shaped recoveries, and Northeast states barely move, there are other places firmly in the middle. Look no further than Nevada, which saw its jobless rate soar to 30.1% in April as its hotels and casinos shuttered. As it reopened this summer, that jobless rate fell to 15% in June. That is a fast recovery but still a long way to go from Nevada’s February jobless rate of 3.6%.
On Friday the BLS will release the July U.S. Jobless rate, which will tell us if the resurgent COVID-19 cases in the Midwest, South, and West are pulling the economy backward. But we’ll have to wait until later this month to get the July rates on a state level.
But many experts expect to see the rate of recovery in the U.S. Slow. Among U.S. Chief executive officers, 42% foresee a U-shaped recovery, 26% expect the dreaded L-shaped recovery, and 23% forecast a W-shaped recovery, or a double-dip recession, according to the Conference Board’s most recent survey of CEOs. Only 9% of U.S. CEOs predict a V-shaped recovery.
