(The Center Square) – The state of New York saw its economic activity plummet in the first quarter of 2020, matching Nevada for the worst drop in the nation when it comes to the January-March period.
The Empire State’s gross domestic product, or GDP, dropped by 8.2 percent from the fourth quarter of 2019, according to data released Tuesday by the federal Bureau of Economic Analysis.
It was in mid-March that Gov. Andrew Cuomo shut down a wide swathe of the state’s economy in an attempt to quell the spread of the novel coronavirus that had stricken the state. All but businesses deemed nonessential were required to stay closed to the public during all of April and most of May, when a phased reopening began.
No state was immune from the national economic slowdown seen in conjunction with the March shutdowns. Nebraska had the smallest GDP drop at 1.3 percent. Some of New York’s neighbors, including Vermont (-6.1 percent), Pennsylvania (-5.6 percent) and New Jersey (-5.5 percent) also saw dramatic declines.
“Accommodation and food services; finance and insurance; healthcare and social assistance; and arts, entertainment, and recreation were the leading contributors to the decrease in real GDP nationally,” the Bureau of Economic Analysis said in a news release accompanying Tuesday’s numbers. “Accommodation and food services was the leading contributor to the decrease in Nevada. Finance and insurance was the leading contributor to the decrease in New York.”
The finance and insurance sector was one of the hardest hit in the BEA’s report, dropping 9 percent from the fourth quarter of 2019 to the first of 2020.
The drop in economic activity has hammered state and local finances, leading lawmakers and the governor to put in place a budget that contemplates steep cuts to education funding. Cuomo has for months harangued Congress to put forth a stimulus package for state budgets, but Senate Majority Leader Mitch McConnell of Kentucky has thus far refused to consider legislation that was passed in the Democratic-controlled House of Representatives.
Even as the state economy begins to move toward normalcy, with most regions having moved into the fourth phase of Cuomo’s reopening plan, storm clouds remain on the horizon. A number of other states that had less of a COVID-19 crisis in March and April than New York are now seeing sharp spikes, raising the prospect that the coronavirus could be reintroduced to a state that has already seen about 25,000 deaths.
Onlookers have warned that New York City, the state and nation’s economic engine, could see a permanent outflux of residents by those worried about future pandemics that can rage through such a heavily populated area. Also, state and city lawmakers have warmed to the idea of imposing taxes on high earners, further putting pressure on some residents to consider moving at a time when the population is already graying and declining.