The State of California is more prepared to weather an economic storm than nearly any other state in the nation. According to a new report from Wallet Hub, California is the second least exposed state in the US to the economic impacts of coronavirus. Georgia ranked least exposed on the list of 51, which included Washington DC.
“California’s increase in the number of unemployment insurance initial claims is among the lowest in the country,” Jill Gonzalez of Wallet Hub, tells GlobeSt.com. “The state also has the fifth largest share of workers with access to paid sick leave, 91%. Another factor that contributed to California’s economy being the second least exposed to the coronavirus is the state’s rainy day fund, which is among the largest nationwide.”
The list was compiled using a number of rankings, including high-risk industries’ share of the state GDP, share of employment from highly impacted industries, unemployment insurance claims and rainy day state funds. “We used ten key metrics to determine this ranking. We chose these metrics as they are indicators of how economies will be impacted, and of the resources businesses have to cope with the crisis,” says Gonzalez. “The metrics include the share of each state’s GDP and workforce from the most affected industries, the increase in the number of unemployment insurance initial claims, the share of employees working from home, and of those with access to paid sick leave. We also looked at each state’s rainy day funds and fiscal condition.”
While the state performed well overall, it scored the best in resources available to deal with the crisis. “Because California is among the states better prepared for digitalization, and has a good work from home infrastructure, the overall economic impact that the state will see due to the pandemic will be one of the smallest,” says Gonzalez.
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Louisiana scored the highest on the list, making it the least likely to deal with an economic crisis, and it is the only state to score an above average score, indicating its high exposure. “As a conclusion, the higher the score and the ranking is, the more impacted the state’s economy will be. Though some states are better positioned economically to deal with this health crisis than others, the impact across the nation will be strong.”
So far, the economic impact nationally has been significant. “California is among the least impacted states. The overall economic impact on the country has been severe so far,” says Gonzalez. It’s led to the closing of several businesses, and the stock market losing over 20% of its value. We have yet to see if the recently passed government stimulus package will help restart our economy.”