U.S.'s Weakest Local Economies May Face Worse From Pandemic

(Reuters) - A decade-long economic expansion did little to narrow the gaps between the United States’ prosperous and ailing areas, with thousands of “distressed” zip codes shedding jobs and businesses in a trend that laid the groundwork for the developing “K” shaped recovery from the coronavirus pandemic.

New analysis from the Economic Innovation Group studying economic patterns across roughly 25,000 zip codes showed that from 2000 through 2018, already prosperous areas pulled further ahead, capturing disproportionate shares of the jobs created and the new businesses that were formed.

For 5,000 or so “distressed” zip codes it was by contrast a period of lost opportunity as they fell further behind, with the number of jobs declining even deep into the recovery, and those that remained more concentrated in industries and occupations likely to have been disrupted by the pandemic.

Economists analyzing the U.S. path to recovery are worried that inside national measures of economic growth lie deepening divisions between industries and people as some sectors recover fast, while employment in the leisure and hospitality industry, for example, remains 20% below where it was in February.

Such service sector workers, the EIG found, made up a disproportionate share of workers in areas already falling behind economically.

“Communities that were already vulnerable going in, that had already been largely overlooked by the period of growth preceding the pandemic, are the most vulnerable to its effects,” said EIG President John Lettieri.


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