Southern states leading coronavirus economic recovery, study finds

US economy is about 55% recovered from COVID-19 lockdown, according to Fivestars

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With the worst of the coronavirus lockdowns seemingly over, the U.S. economy is slowly beginning to recover from the unprecedented shock — with Southern states leading the way.

A study published Thursday by Fivestars, a small business marketing and loyalty program platform, found the nation is at a 55 percent recovery rate from the shutdowns, with small business spending up 14 percent from the previous week.

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But there’s a drastic difference between states that started to navigate reopening their economies earlier than those that have taken a more conservative approach to slowing the spread of the virus.

“On a high level, I think what you’re seeing -- it’s not surprising per se -- but it really varies a lot by the state's posture toward shelter-in-place,” Victor Ho, founder and CEO of Fivestars, told FOX Business. “The more creative they are and the more supportive they are of their businesses, the better they’re doing.”

Florida, which entered the first phase of reopening in early May, is nearly two-thirds of the way to recovery compared to this time last year, the study found. Although sales over Memorial Day weekend dropped about 26 percent from last year, the state still saw overall sales increase 14 percent last week.

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Similarly, Georgia and Texas, both among the initial states to begin easing stay-at-home guidelines, saw a steady 12 percent increase in weekly sales. California, which has been slower to reopen its economy, saw a 10 percent increase in sales from the previous week.

In Mississippi, small business sales fell just 7 percent compared to the year-ago period, while sales in South Carolina and Tennessee dipped 10 percent. Conversely, Michigan’s sales were down 78 percent from last year, while New York -- the epicenter of the virus -- saw sales plunge 65 percent. Maine’s sales fell 75 percent, and New Jersey’s dropped by 66 percent.

But Ho said that even as states start to move forward with rolling back some restrictions, the U.S. economy cannot return to its full pre-crisis level so long as social distancing guidelines remain in place.

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“This is what we internally are pretty scared about on behalf of the small businesses in this country,” he said. “We don’t think 100 percent will be possible until a vaccine comes out. Even with all the partial reopening plans, there’s a lot of constraints.”

In a bleak report released last week, the nonpartisan Congressional Budget Office forecast the nation's GDP will likely be 5.6 percent smaller in the fourth quarter of 2020 than a year earlier and said unemployment will remain persistently high at the end of 2021.

Ho said he hopes to see either additional government support or consumers rally in support of small businesses to keep them afloat.

“Otherwise,” he said, “we’re going to come back to a devastated landscape.”