Mapped: America’s $2 Trillion Economic Drop, By State and Industry
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Mapped: America’s $2 Trillion Economic Drop, by State and Sector

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Change in GDP $2T Economic Drop

Mapped: America’s $2 Trillion Economic Drop

It only took a handful of months for the U.S. economy to reel from COVID-19’s effects.

As unemployment rates hit all-time highs and businesses scrambled to stay afloat, new data shows that current dollar GDP plummeted from nearly $21.6 trillion down to $19.5 trillion between Q1’2020 and Q2’2020 (seasonally adjusted at annual rates).

While all states experienced a decline, the effects were not distributed equally across the nation. This visualization takes a look at the latest data from the Bureau of Economic Analysis, uncovering the biggest declines across states, and which industries were most affected by COVID-19 related closures and uncertainty.

Change in GDP by State and Industry

Between March-June 2020, stay-at-home orders resulted in disruptions to consumer activity, health, and the broader economy, causing U.S. GDP to fall by 31.4% from numbers posted in Q1.

The U.S. economy is the sum of its parts, with each state contributing to the total output—making the COVID-19 decline even more evident when state-by-state change in GDP is taken into consideration.

StateReal GDP ChangeBiggest Industry DeclineIndustry Change
(p.p.)
Alabama-29.6Durable Goods Manufacturing-5.02
Alaska-33.8Transport and Warehousing-9.43
Arizona-25.3Accommodation and Food Services-4.2
Arkansas-27.9Health Care and Social Assistance-4.57
California-31.5Accommodation and Food Services-4.43
Colorado-28.1Accommodation and Food Services-3.85
Connecticut-31.1Health Care and Social Assistance-4.61
Delaware-21.9Health Care and Social Assistance-4.19
Florida-30.1Accommodation and Food Services-5.3
Georgia-27.7Accommodation and Food Services-3.43
Hawaii-42.2Accommodation and Food Services-18.85
Idaho-32.4Health Care and Social Assistance-4.49
Illinois-29.7Accommodation and Food Services-4.11
Indiana-33.0Durable Goods Manufacturing-6.74
Iowa-28.2Durable Goods Manufacturing-4.35
Kansas-30.3Durable Goods Manufacturing-4.42
Kentucky-34.5Durable Goods Manufacturing-5.41
Louisiana-31.4Accommodation and Food Services-4.72
Maine-34.4Accommodation and Food Services-7.09
Maryland-27.7Health Care and Social Assistance-4.18
Massachusetts-31.6Health Care and Social Assistance-4.73
Michigan-37.6Durable Goods Manufacturing-7.57
Minnesota-31.3Health Care and Social Assistance-4.55
Mississippi-32.9Health Care and Social Assistance-4.56
Missouri-32.1Health Care and Social Assistance-4.29
Montana-30.8Health Care and Social Assistance-5.67
Nebraska-31.0Transport and Warehousing-6.13
Nevada-42.2Accommodation and Food Services-15.62
New Hampshire-36.9Accommodation and Food Services-6.7
New Jersey-35.6Health Care and Social Assistance-5.33
New Mexico-28.3Mining, Quarrying, and Oil and Gas Extraction-4.4
New York-36.3Accommodation and Food Services-5.97
North Carolina-30.5Accommodation and Food Services-4.67
North Dakota-27.6Transport and Warehousing-4.94
Ohio-33.0Durable Goods Manufacturing-4.92
Oklahoma-31.1Transport and Warehousing-6.22
Oregon-31.9Accommodation and Food Services-5.81
Pennsylvania-34.0Health Care and Social Assistance-5.07
Rhode Island-32.4Health Care and Social Assistance-5.73
South Carolina-32.6Accommodation and Food Services-6.16
South Dakota-28.8Health Care and Social Assistance-5.44
Tennessee-40.4Health Care and Social Assistance-6.25
Texas-29.0Health Care and Social Assistance-3.13
Utah-22.4Transport and Warehousing-3.12
Vermont-38.2Accommodation and Food Services-8.52
Virginia-27.0Health Care and Social Assistance-3.59
Washington-25.5Accommodation and Food Services-4.39
West Virginia-29.6Health Care and Social Assistance-5.48
Wisconsin-32.6Durable Goods Manufacturing-5.17
Wyoming-32.5Transport and Warehousing-7.38
🇺🇸 U.S.-31.4Accommodation and Food Services-4.38

Note: Industry changes are reported in percentage points (p.p.) of total current dollar GDP between Q1 and Q2.

A total of 18 states took the biggest hit within the Accommodation & Food Services sector, which was also the industry that suffered the most nationally, dropping by 4.38%.

Highly dependent on tourism, Hawaii bore the brunt of decline in this industry with a 18.85% drop. According to The Economic Research Organization at the University of Hawaii (UHERO), a second wave of infections and expired financial assistance were behind this contraction.

Next, the Health Care & Social Assistance sector was most impacted in 17 states between the two quarters, falling the most in Tennessee (-6.25%).

The most resilient industry amid the pandemic was Financial Services. In the state of Delaware, home to major banks such as JPMorgan Chase and Capital One, the sector actually grew by 4.47%. However, Delaware’s GDP ultimately still fell due to contractions in other sectors.

Each Industry’s Worst Performing State

Looking at it another way, the worst-performing state by industry also becomes clear when the change in percentage points (p.p.) Q1’–Q2’2020 GDP contributions are measured. Of the 21 industries profiled, Nevada shows up in the lower end of the spectrum four times.

IndustryWorst-performing stateChange (p.p.)
Agriculture, forestry, fishing and huntingNebraska-4.99%
Mining, quarrying, and oil and gas extractionWyoming-5.76%
UtilitiesNebraska-0.33%
ConstructionNew York-2.02%
Durable goods manufacturingMichigan-7.57%
Nondurable goods manufacturingIndiana-2.65%
Wholesale tradeNew Jersey-3.35%
Retail tradeNevada-2.88%
Transportation and warehousingAlaska-9.43%
InformationCalifornia-0.88%
Finance and insuranceSouth Dakota-1.53%
Real estate and rental and leasingFlorida-2.00%
Professional, scientific, and technical servicesDistrict of Columbia-4.46%
Management of companies and enterprisesNevada-0.38%
Administrative/ support /waste management / remediationNevada-2.48%
Educational servicesRhode Island-1.47%
Health care and social assistanceTennessee-6.25%
Arts, entertainment, and recreationNevada-4.44%
Accommodation and food servicesHawaii-18.85%
Other services (ex. govt)District of Columbia-2.40%
Government and government enterprisesAlaska-4.19%

With many U.S. business leaders expecting a second contraction to occur in the economy, will future figures reflect further declines, or will states manage to bounce back?

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Interest Rate Hikes vs. Inflation Rate, by Country

Inflation rates are reaching multi-decade highs in some countries. How aggressive have central banks been with interest rate hikes?

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Interest Rate Hikes vs. Inflation Rate, by Country

Imagine today’s high inflation like a car speeding down a hill. In order to slow it down, you need to hit the brakes. In this case, the “brakes” are interest rate hikes intended to slow spending. However, some central banks are hitting the brakes faster than others.

This graphic uses data from central banks and government websites to show how policy interest rates and inflation rates have changed since the start of the year. It was inspired by a chart created by Macrobond.

How Do Interest Rate Hikes Combat Inflation?

To understand how interest rates influence inflation, we need to understand how inflation works. Inflation is the result of too much money chasing too few goods. Over the last several months, this has occurred amid a surge in demand and supply chain disruptions worsened by Russia’s invasion of Ukraine.

In an effort to combat inflation, central banks will raise their policy rate. This is the rate they charge commercial banks for loans or pay commercial banks for deposits. Commercial banks pass on a portion of these higher rates to their customers, which reduces the purchasing power of businesses and consumers. For example, it becomes more expensive to borrow money for a house or car.

Ultimately, interest rate hikes act to slow spending and encourage saving. This motivates companies to increase prices at a slower rate, or lower prices, to stimulate demand.

Rising Interest Rates and Inflation

With inflation rates hitting multi-decade highs in some countries, many central banks have announced interest rate hikes. Below, we show how the inflation rate and policy interest rate have changed for select countries and regions since January 2022. The jurisdictions are ordered from highest to lowest current inflation rate.

JurisdictionJan 2022 InflationMay 2022 InflationJan 2022 Policy RateJun 2022 Policy Rate
UK5.50%9.10%0.25%1.25%
U.S.7.50%8.60%0.00%-0.25%1.50%-1.75%
Euro Area5.10%8.10%0.00%0.00%
Canada5.10%7.70%0.25%1.50%
Sweden3.90%7.20%0.00%0.25%
New Zealand5.90%6.90%0.75%2.00%
Norway3.20%5.70%0.50%1.25%
Australia3.50%5.10%0.10%0.85%
Switzerland1.60%2.90%-0.75%-0.25%
Japan0.50%2.50%-0.10%-0.10%

The Euro area has 3 policy rates; the data above represents the main refinancing operations rate. Inflation data is as of May 2022 except for New Zealand and Australia, where the latest quarterly data is as of March 2022.

The U.S. Federal Reserve has been the most aggressive with its interest rate hikes. It has raised its policy rate by 1.5% since January, with half of that increase occurring at the June 2022 meeting. Jerome Powell, the Federal Reserve chair, said the committee would like to “do a little more front-end loading” to bring policy rates to normal levels. The action comes as the U.S. faces its highest inflation rate in 40 years.

On the other hand, the European Union is experiencing inflation of 8.1% but has not yet raised its policy rate. The European Central Bank has, however, provided clear forward guidance. It intends to raise rates by 0.25% in July, by a possibly larger increment in September, and with gradual but sustained increases thereafter. Clear forward guidance is intended to help people make spending and investment decisions, and avoid surprises that could disrupt markets.

Pacing Interest Rate Hikes

Raising interest rates is a fine balancing act. If central banks raise rates too quickly, it’s like slamming the brakes on that car speeding downhill: the economy could come to a standstill. This occurred in the U.S. in the 1980’s when the Federal Reserve, led by Chair Paul Volcker, raised the policy rate to 20%. The economy went into a recession, though the aggressive monetary policy did eventually tame double digit inflation.

However, if rates are raised too slowly, inflation could gather enough momentum that it becomes difficult to stop. The longer high price increases linger, the more future inflation expectations build. This can result in people buying more in anticipation of prices rising further, perpetuating high demand.

“There’s always a risk of going too far or not going far enough, and it’s going to be a very difficult judgment to make.” — Jerome Powell, U.S. Federal Reserve Chair

It’s worth noting that while central banks can influence demand through policy rates, this is only one side of the equation. Inflation is also being caused by supply chain issues, a problem that is more or less outside of the control of central banks.

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3 Insights From the FED’s Latest Economic Snapshot

Stay up to date on the U.S. economy with this infographic summarizing the most recent Federal Reserve data released.

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us economic snapshot

3 Insights From the Latest U.S. Economic Data

Each month, the Federal Reserve Bank of New York publishes monthly economic snapshots.

To make this report accessible to a wider audience, we’ve identified the three most important takeaways from the report and compiled them into one infographic.

1. Growth figures in Q2 will make or break a recession

Generally speaking, a recession begins when an economy exhibits two consecutive quarters of negative GDP growth. Because U.S. GDP shrank by -1.5% in Q1 2022 (January to March), a lot rests on the Q2 figure (April to June) which should be released on July 28th.

Referencing strong business activity and continued growth in consumer spending, economists predict that U.S. GDP will grow by +2.1% in Q2. This would mark a decisive reversal from Q1, and put an end to recessionary fears for the time being.

Unfortunately, inflation is the top financial concern for Americans, and this is dampening consumer confidence. Shown below, the consumer confidence index reflects the public’s short-term outlook for income, business, and labor conditions.

consumer price index 2005 to 2022

Falling consumer confidence suggests that more people will delay big purchases such as cars, major appliances, and vacations.

2. The COVID-era housing boom could be over

Housing markets have been riding high since the beginning of the COVID-19 pandemic, but this run is likely coming to an end. Here’s a summary of what’s happened since 2020:

  • Lockdowns in early 2020 created lots of pent-up demand for homes
  • Greater household savings and record-low mortgage rates pushed demand even further
  • Supply chain disruptions greatly increased the cost of materials like lumber
  • Construction of new homes couldn’t keep up, and housing supply fell to historic lows

Today, home prices are at record highs and the cost of borrowing is rapidly rising. For evidence, look no further than the 30-year fixed mortgage rate, which has doubled to more than 6% since the beginning of 2022.

Given these developments, the drop in the number of home sales could be a sign that many Americans are being priced out of the market.

3. Don’t expect groceries to become any cheaper

Inflation has been a hot topic this year, especially with gas prices reaching $5 a gallon. But there’s one category of goods that’s perhaps even more alarming: food.

The following table includes food inflation over the past three years, as the percent change over the past 12 months.

DateCPI Food Component (%)
2018-02-011.4%
2019-05-012.0%
2019-06-011.9%
2019-07-011.8%
2019-08-011.7%
2019-09-011.8%
2019-10-012.1%
2019-11-012.0%
2019-12-011.8%
2020-01-011.8%
2020-02-011.8%
2020-03-011.9%
2020-04-013.5%
2020-05-014.0%
2020-06-014.5%
2020-07-014.1%
2020-08-014.1%
2020-09-014.0%
2020-10-013.9%
2020-11-013.7%
2020-12-013.9%
2021-01-013.8%
2021-02-013.6%
2021-03-013.5%
2021-04-012.4%
2021-05-012.1%
2021-06-012.4%
2021-07-013.4%
2021-08-013.7%
2021-09-014.6%
2021-10-015.3%
2021-11-016.1%
2021-12-016.3%
2022-01-017.0%
2022-02-017.9%
2022-03-018.8%
2022-04-019.4%
2022-05-0110.1%

From this data, we can see that food inflation really picked up speed in April 2020, jumping to +3.5% from +1.9% in the previous month. This was due to supply chain disruptions and a sudden rebound in global demand.

Fast forward to today, and food inflation is running rampant at 10.1%. A contributing factor is the impending fertilizer shortage, which stems from the Ukraine war. As it turns out, Russia is not only a massive exporter of oil, but wheat and fertilizer as well.

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