Southbound - Summer 2020

The four U.S. regions are faring differently in this coronavirus recession

By Michael Randle, EDITOR


The U.S. is still in recession and has been since February as a result of a crushing blow to the service sector this spring. Theaters, bars, restaurants, theme parks and anything related to travel remains a dumpster fire. And it will probably stay that way until the virus subsides or there is a vaccine that is widely distributed. Economists can speculate as much as they want, but this economy is all about the virus. There are no other players in this recession. It is all just about the virus.

Recessions over the years seem to be different based on which sectors suffer the most. We have had recessions in the U.S. that have hammered the manufacturing sector several times. In this coronavirus recession, manufacturing is somewhat stable except in the aerospace industry and lesser so in the automotive sector. Those are the South's two largest manufacturing industries. When those two sectors are slowed, the South's economy on the manufacturing side slows as well.

But there are all kinds of other manufacturing deals (other than aerospace and automotive) that are announcing every day. In fact, after almost 40 years of tracking economic development in the South, I am surprised at how many projects are being announced in this recession.

But this nation's economy and the South's economy for the most part are supported by the service sector, and that is why this recession is so tough on families and businesses alike. Over 75 percent of the nation's economy is services-based.

Imagine you are an official in a city like New Orleans, Orlando, Asheville, Charleston or another big-time Southern tourist city. Imagine being a restaurant owner in one of these cities. Right now, the service sector is on its knees and there still is no clear path to recovery.

This recession is affecting the four U.S. regions differently. As of August, unemployment rates in 10 states are over 10 percent, led by Nevada at 13.2 percent. Some of the other states included in that “over 10 percent club” include Pennsylvania, New Jersey, New York and Massachusetts. Not one state in the South has above a 10 percent unemployment rate.

In fact, here are the U.S. regional unemployment rates in the coronavirus recession as of August 2020:
South: 6.48 percent
Midwest: 6.84 percent
West: 8.43 percent
Northeast: 9.08 percent

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