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The impact of COVID-19 on U.S. states’ economic activity

State-level GDP data show the second quarter was much worse than the first

GDP comes in various forms—for the nation as a whole and also for individual U.S. states. The map above shows the change in real GDP in each U.S. state for the first quarter of 2020. This was at the start of the pandemic, and some states were hit hard.

The worst declines were in Louisiana (-11.91%), Delaware (-11.43%), Wyoming (-10.53%), Hawaii (-8.92%), Wisconsin (-8.76%), South Carolina (-8.24%), and Michigan (-7.94%). The hope at the time was that this slump would be temporary. We now have the data for the second quarter:

While the colors of the map are similar, the actual values in the second quarter are much worse. To put this in perspective, consider that the decline in the worst state in the first-quarter map (-11.91% in Louisiana) was nowhere near the decline in the best state in the second-quarter map (-21.91% in Delaware). The numbers are astounding, with Hawaii, Nevada, and Tennessee losing over 40% of their economic activity.

To see more details and find your home state, click the link below each map in this post to reach the interactive maps on GeoFRED.

How these maps were created: From GeoFRED, after opening the cogwheel in the upper left corner, under “Region” choose “State,” under “Data” choose “Total Real Domestic Product by Industry,” under “Units” choose “Percent Change,” and then choose colors to taste. Use the arrows in the legend box (lower right corner) to switch dates.

Suggested by Christian Zimmermann.

Employment losses are largest for the least educated

The FRED Blog has discussed how unemployment rates are inversely related to educational attainment and how they change during recessions. In short: Workers with more education are richer in so-called human capital and tend to be able to adapt more easily to changes in large-scale labor market conditions.

The FRED graph above shows employment levels after the COVID-19-related recession began. The length of the bars represents the percent change,  relative to a year ago, in the number of employed people 25 years and older. And these workers are divided into groups according to educational attainment.

Workers who didn’t graduate from high school had the largest losses in employment. Workers who did graduate from high school, including those  with some college or an associate degree, also experienced significant losses in employment but fared a bit better. Workers with a bachelor’s degree or higher were able, for the most part, to remain employed.

The second FRED graph shows the same four groups of workers but for the previous recession, from December 2007 to June 2009. Although these bars don’t go as far into negative territory, we see a similar pattern: At least initially, the more-educated labor force was more resilient. As the recession passed the 12-month mark, however, all education groups started to report losses in employment.

Low educational attainment isn’t necessarily a permanent trait, so it’s possible for workers who are laid off to exit the labor force, gain more human capital through formal education, and re-enter the labor force as more-educated workers. When they do this, they can expect to enjoy steadier employment. To learn more about education’s effects on employment stability, read the work of Isabel Cairo and Tomaz Cajner.

How these graphs were created: Start from Table A-4 of the Current Population Survey, select the series you want shown, and click “Add to Graph.” From the “Edit Graph” panel, select units “Percent Change from Year Ago” and click on “Copy to all.” From the “Format” tab, select “Graph type: Bar.” Adjust the sample period to match the dates displayed in each graph.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: LNS12027659, LNS12027660, LNS12027662, LNS12027689

The state of the economy, weekly

Measuring the condition of an economy isn’t easy. The most reliable indicators are computed and released only quarterly or yearly, and then with a considerable lag. They are also subject to revisions. For a policymaker or anyone needing to observe and assess the economy, this can be very frustrating.

Fortunately, FRED provides access to some series that have higher frequency (weekly or even daily), are released faster, and don’t need revisions. Individually, these components offer only a partial picture of the economy; but together, they may be informative.

The Lewis-Mertens-Stock index shown in the FRED graph above provides this kind of informative picture of the economy: It comprises ten daily or weekly series, uses a statistical technique called factor analysis to determine what’s common among them, and scales the result so it can be presented as a percentage change of GDP from exactly one year ago. (That is, since the same day in the previous year.)

Daily GDP is obviously not known, so the index can’t be compared with any actual daily GDP reading. But it can be compared with quarterly GDP, which we do in the graph below. As shown by the tightness of the two lines, the index performs remarkably well.

How these graph were created: Search FRED for “weekly index” and the series should be among the top choices. From this first graph, use the “Edit Graph” panel to change frequency to quarterly (using the average). Open the “Add Line” tab, search for “real GDP,” select it, and change units to “Percentage change from year ago.” Change sample period to start when both series are available.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: GDPC1, WEI


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