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US recovery of GDP and jobs will vary widely by region

Wednesday, October 21, 2020

Significance

COVID-19 has affected all 50 states unevenly, so the starting points for recovery vary. Twenty-one states have this month recorded their highest 7-day average of new cases, many of them among the first to reopen, which will slow the recovery. The labour market consequences are shaping voter intentions in the presidential election.

Impacts

  • Protracted recession, especially in less-urbanised areas, will increase ‘deaths of despair’.
  • A slow recovery may push discussion of new broad-based taxes up federal and state policy-making agendas.
  • COVID-19 will accelerate the reforms to underfunded state and local government pensions that were initiated after the 2008-09 recession.
  • Investors’ overvaluation of the biotech sector in the rush for a vaccine could trigger a sell-off in equities.

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