State economies are booming, but most are still deep in a hole

This image shows Boise, Idaho. There are red trees in the foreground and the Boise sykline with different buildings behind that.
Boise, Idaho. Idaho is one of the states above pre-pandemic economic activity based on the Philadelphia Fed’s coincident indexes. Darwin Fan/Getty Images
  • State economies are bounding back, but most are still behind their pre-pandemic conditions.
  • The latest coincident indexes from the Philadelphia Fed give a sense of how states are doing.
  • Hawaii’s economy is around 11% below pre-pandemic activity but also saw a large three-month gain.
  • See more stories on Insider’s business page.

Almost all of the states in the US have been on an economic upswing in the past few months, but most are still feeling the deep scars of pandemic devastation.

That’s according to new May 2021 data from the Federal Reserve Bank of Philadelphia, which uses an index of four different measures to track how states’ economies are faring month to month, which the bank’s researchers call the coincident index. The majority of states saw their economic outlooks rebounding from months prior, but most still remain well below pre-pandemic levels as seen in the following map:

Utah is not only above its pre-pandemic index, but continues to see robust growth. It’s one of just 13 states that has recovered fully to pre-pandemic economic activity based on the Philadelphia Fed’s measures, and it continues to lead the pack with a percent increase of 3.85% from February 2020 to May 2021. Another stand out: South Dakota, which had the fifth lowest unemployment rate in May among states and is around 2% below pre-pandemic employment. Both states have coincident indexes above February 2020 levels.

“Many people moved to those states precisely because they did have such a permissive attitude towards business,” Julia Pollak, a labor economist at ZipRecruiter, said of states like South Dakota and Utah.

Utah was one of a handful of states that opted not to put in place a stay at home order, Politico’s Rebecca Rainey and Eleanor Mueller reported in an analysis.

Montana, a favored pandemic-relocation destination, has seen its economy come roaring back and then some. It was another state quick to reopen and lift stay at home orders.

Particularly hard hit states are on the rebound, but still have a long way to go

States that were particularly pummeled by the pandemic are posting gains. New York, Massachusetts, Hawaii, and Nevada – all of which were particularly hard hit by the pandemic’s economic toll – saw notable gains from months earlier. Hawaii and Nevada’s tourist-heavy economies did not fare well amidst the pandemic’s travel chill, and both New York and Massachusetts contended with devastating case loads.

But all of those states still have economies well below February 2020 levels, showing the continued unevenness of recovery. Higher vaccination rates in the Northeast may continue to propel some of those economies forward, but there’s quite a bit of ground to cover.

While Hawaii is far below pre-pandemic economic activity and had the highest unemployment rate among states in May, the state saw the largest percent increase in the Philadelphia Fed measure from February 2021 to May 2021 at almost 5%. Massachusetts and New York also saw robust increases in their economic activity from February 2021, as seen in the following map showing each state’s change in coincident indexes over the last three months:

According to the latest release, 47 states saw their indexes increase from February 2021 to May 2021. Wyoming and Alaska were the only two states that saw their indexes decrease during this time period. Iowa’s coincident index was virtually unchanged.

Of course, earlier reopenings – and more relaxed restrictions – have their own toll. The workers propping up those economies may have had to return to workplaces where they felt at risk, or had to decide between a paycheck and staying home over health and other safety concerns.

For example, a survey of female tipped workers by advocacy group One Fair Wage found that harassment was up during the pandemic – and tips were down.