As the coronavirus pandemic has hit some places harder than others, it also has had an unpredictable economic impact on various states that is unrelated to the infection or death rates of the disease. Bankrate has used mortgage delinquencies and unemployment data to determine which states are struggling the most economically during the pandemic. Based on these rates for May, Louisiana was ranked 7th for states with the worst economic fallout, based on unemployment at 13.3 percent and mortgage delinquency at 11.16 percent.
Leading the charge for the five hardest-hit states are Nevada, with mortgage delinquency rate at 9.99 percent and unemployment at 25.3 percent, and Hawaii, with mortgage delinquency at 9.30 percent and unemployment at 22.6 percent. While these states have reported fewer COVID-19 related deaths than other states, the loss of the tourism industry they are dependent on has made their economies suffer the most out of U.S. states.
"Things don't look very good here in Las Vegas," Stephen Miller, an economics professor at the University of Nevada, Las Vegas, says. "Leisure and hospitality was the worst-hit sector, and 30 percent of our employment in southern Nevada is in leisure and hospitality."
Tourism-dependent New Orleans was affected in a similar way, with much of the unemployment of more than 112,000 food and hospitality service workers caused by the pandemic and shutdown. In Louisiana altogether, these essential workers in industries like sanitation work, restaurants, and hospitality were hit the hardest and also were in industries that paid some of the lowest wages and where black and brown workers are overrepresented, according to the Louisiana Budget Project. The economic consequences of unemployment for individuals, combined with financial trouble in the housing market, has significantly affected the economic status of Louisiana as a whole during this pandemic.
"For a lot of people, the last time they really heard about New Orleans in the context of COVID-19 was that we were a hot spot," said Quentin Messer, head of the New Orleans Business Alliance, the city's economic development agency, to NOLA.com. "Well, we are no longer a hot spot."
In 2019, New Orleans saw 20 million visitors who spent $10.05 billion, according to My New Orleans.com. Now, since the shutdown in mid-March, the halt of the tourism industry is making the city lose more than $200 million per week in money visitors would usually spend. The tourism industry is critical for many small-business owners and workers who depend on it for their livelihood, and without it, they are struggling to retain their jobs and pay mortgages, as the study shows.
While this has affected New Orleans in a similar way to Las Vegas, Louisiana is still ranked behind six other states more dependent on tourism, though this ranking is still pretty high across all the different states. As the pandemic continues to slowdown the economy, unemployment is tied to challenges in the housing industry that may never have been observed before.
"States experiencing high unemployment will see mortgage delinquencies surge if unemployment remains elevated as forbearance periods expire," says Greg McBride, CFA, Bankrate chief financial analyst. "This year may see the worst for unemployment, but 2021 will likely bring the worst for mortgage delinquencies and defaults."