New York is experiencing the most sluggish economic recovery in the United States — a reality that is reportedly slowing other states’ rebounds.
The Back-to-Normal Index — a project of Moody’s Analytics and CNN Business tracking economic recovery from the lockdown-induced recession — shows that states which avoided or quickly removed COVID-19 regulations outperformed states that lingered in reopening.
Two weeks ago, the project indicated that South Dakota and Florida became the first states to surpass their pre-recession strength, respectively operating at 106% and 101% of former capacity. Gov. Kristi Noem (R-SD) never mandated a lockdown, while Gov. Ron DeSantis (R-FL) was among the first to end his lockdown order.
Today, South Dakota is performing at 109% pre-COVID strength. Idaho (104%), West Virginia (101%), Montana (101%), and Florida (101%) continue to lead the nation in economic recovery.
Two weeks ago, New York ranked last in the nation, operating at only 79% of its former capacity. Now, at 83% capacity, New York continues to rank below every other state.
CNN Business explains that New York’s slow economic recovery is restricting the remainder of the United States from rebounding:
In 2019, before Covid hit, New York had the third-strongest economy among US states, lagging only Texas and California. The state’s gross domestic product — the broadest measure of economic activity — was nearly $1.8 trillion, on par with the GDP of Italy. More than $1 trillion of that came from economic activity in New York City. The state contributed more than 8% to America’s overall GDP that year.
In 2020, New York’s GDP dropped to $1.7 trillion. That might not sound like a big difference, but we’re dealing in trillions of dollars here. When states that are economic powerhouses underperform, it’s not great for the recovery of the entire nation.
While the United States is experiencing more rapid output growth than other Western powers, the economic liberty of its citizens — as measured by the Heritage Foundation’s “Index of Economic Freedom” — is falling.
The primary driver of the United States’ disappointing performance in the ranking is higher levels of government debt — much of which occurred through omnibus COVID-19 relief bills passed under the Trump and Biden administrations. Though the United States maintains relatively high rankings in categories such as business freedom, property rights, and labor freedom, “intrusive regulation of the health care and financial sectors” is also a bottleneck for greater prosperity.