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Have states with fewer COVID-19 restrictions fared better economically?

Monday, July 25, 2022
By Austin Tannenbaum
YES

According to Politico, "States that shut down only briefly – or not at all – rebounded far quicker than those that remained closed" across metrics such as GDP, jobs and unemployment in 2021. Republican-led states, which adopted more lax COVID-19 policies, represented eight of the top 10 economies, while Democrat-led states, which adopted stricter COVID-19 policies, represented eight of the bottom 10 economies.

This trend has continued into 2022: Labor Department data show that red states have added 341,000 jobs since February 2020—the month before the pandemic hit—while blue states have lost 1.3 million, as of May.

However, in 2020, states with stricter COVID-19 rules had better economic outcomes. The faculty director of UCLA's Anderson School of Management explained that people are more likely to shop at businesses if they feel safe and that states with lax policies experienced work absenteeism due to higher infection rates. This discrepancy between years may be explained by the fact that initially fearful and vulnerable individuals became less cautious and more immune to COVID-19 as the pandemic progressed.

The New York Times noted that blue states, which tend to have service-based economies and higher costs of living, were more susceptible to pandemic-related disruptions, as lockdowns shuttered a larger percentage of their economies and city dwellers relocated to less expensive parts of the U.S.

This fact brief is responsive to conversations such as this one.
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