“Return to normal” seems elusive
October 21, 2020
With the number of positive coronavirus cases recently reaching their highest levels since August, many observers now worry about a renewal of economic restrictions. The crippling shutdown at the outset of the COVID-19 pandemic drove Q2 GDP to fall at a record annualized rate of 31%. Economists expect a record rebound when Q3 GDP is reported later this month, spurred by the gradual reopening of the economy. But the Q3 surge is unlikely to close the gap from earlier in the year.
A look at the CNN/Moody’s Analytics “Back-to-Normal” Index shows a wide variance between states in their paths to economic recovery. On a 1-100 scale – with 100 representing a return to pre-pandemic economic activity – Maine scores the highest at 93.3, while Hawaii remains well behind with a 60.4 score. The average for all U.S. states is 82.9, suggesting the economy as a whole is 17% below “normal.” But this average is a significant improvement from the low of 59.0 in April.
While many Southern states were aggressive in reopening their economies, it’s Midwestern and Rocky Mountain states that are closer to a return to pre-COVID-19 activity – including Ohio, Indiana, New Mexico, North Dakota, Montana and Colorado. These states, unfortunately, are also seeing new record levels of coronavirus cases – indicating some degree of correlation between rising cases and resumed economic activity.
Medical experts are sending clear messages that the virus is not going away any time soon and the country as a whole should prepare for a challenging winter. Will states choose to manage a rebound with current mitigation efforts, or will economic restrictions need to be implemented again?
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