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COVID Recovery: How is the American Southwest Doing?

States throughout the region boast a wide disparity of economic recovery in the aftermath of the pandemic.

Two and a half years after most of the nation went into heavy COVID-19 lockdown, has the American Southwest’s economy recovered?

Well, that depends.

It’s feast and famine in the region comprising Texas, Oklahoma, Colorado, New Mexico, Arizona, Utah, Nevada, and California. Some states are thriving — almost as if stay-at-home orders, social distancing, mask mandates, “vaccine” requirements, and school closures never happened — while others continue to struggle.

Let’s start with the simplest metric: employment. Amazingly, the United States did not regain the number of jobs it had in February 2020 until August. In the Southwest, where economic growth consistently outperforms national measures, some states have led the nation in net employment expansion. Utah (6.79 percent) and Arizona (5.03 percent) are superstars, while Texas (3.97 percent), Colorado (3.76 percent), and Oklahoma (2.69 percent) significantly surpass the national mark, too.

Now for the laggards. California, Nevada, and New Mexico each have fewer jobs today than they did before COVID-19. The Silver State’s situation is downright catastrophic — a decline of 2.31 percent since the pre-lockdown period. That’s worse than Illinois. Worse than Ohio. Worse than New Jersey.

Another key barometer is the labor force participation rate (LFPR), which the federal government defines as “the percentage of the population that is either working or actively looking for work.” For the nation, it’s down 1.74 percent. “Stimulus” payments, enhanced unemployment benefits, boosted Medicaid enrollment, eviction moratoriums. The subsidies and protections flowed like spring snowmelt, and there’s no doubt that all that “free” largesse discouraged people from entering, or reentering, the labor market.

In the Southwest, Colorado, Texas, and Oklahoma deserve credit for accomplishing the darn-near impossible — their LFPRs are higher now than they were two and a half years ago. (Utah, with a historically high rate, is right where it was in February 2020.) Sadly, New Mexico’s LFPR, always among America’s worst, has plummeted. Yet, here again, Nevada lands at the Southwest’s rock bottom, falling by 2.31 percent.

Finally, unemployment. In August, half of the eight states had jobless rates lower than the nation’s. California, Nevada, and New Mexico were higher. The outlier? Texas, despite its impressive job growth, posts slightly higher unemployment than the nation.

Perhaps so many people are moving to the Lone Star State, its economy can’t keep up.

Earlier this year, a literature review and meta-analysis by the Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise concluded that “lockdowns … had little to no public health effects,” while imposing “enormous economic and social costs where they have been adopted.” It should come as no surprise that the Southwest’s economic overachievers (e.g., Utah, Arizona, and Oklahoma) generally enacted the lightest COVID-19 controls, while the clunkers (e.g., California and New Mexico) were ardent disciples of Saint Fauci.

But long before lockdowns, the region’s states followed diverging policy models. And ideology has consequences. California’s tax burden, according to the Tax Foundation, is a stunning 57 percent higher than Texas’s. The latest edition of the Fraser Institute’s Economic Freedom of North America report puts Utah, Oklahoma, and Texas near the top — but California and New Mexico in the bottom five. And weighing all eight states equally, the Southwest’s ranking on the Cato Institute’s assessment of both economic and personal freedoms would be 22nd. California’s? Just behind Hawaii and New York, at 48th.

For decades, the Southwest has enjoyed special status as a corner of the country where millions of Americans wish to move or start businesses. But the region’s future now proceeds on two opposite paths. One continues the tradition: low taxes; reasonable regulations; a live-and-let-live attitude that eschews the Nanny State. The other embraces almost unlimited government, in a crusade to enforce “equity” and manifest a bizarre, destructive vision of eco-utopianism.

COVID-19 accelerated the region’s stark divergence. And Election Day will offer a glimpse of whether the split will weaken or intensify.

By D. Dowd Muska

Dowd brings nearly 30 years of research and writing experience to the Institute. A veteran of several think tanks, he is an expert on government at the municipal, county, state, and federal levels.

Raised on an apple orchard in the Connecticut River Valley, D. Dowd Muska is a researcher, writer, editor, and commentator. His focus is the nexus of fiscal policy, economic development, and technology.

Mr. Muska is the author of numerous policy studies, and his writing has appeared in newspapers throughout the nation, including the Las Vegas Review-Journal, The Detroit News, the Orlando Sentinel, the Cape Cod Times, the Santa Fe New Mexican, the Hartford Courant, the Waco Tribune-Herald, the Albuquerque Journal, the New Haven Register, and The Oklahoman. A graduate of The George Washington University, he lives in the Albuquerque metro area, but has started (very) early planning for a relocation to the Sierra Blanca in Lincoln County, New Mexico. He recently launched the Substack platform No Dowd About It.

2 replies on “COVID Recovery: How is the American Southwest Doing?”

Will the split weaken or intensify? A lot depends on the Governor. The length of the lockdown at home order was only a factor. But recall the state legislatures and courts took no part in lockdown – it was a Gov’nor thing.

Dowd-less you know that New Mexico and Utah are THE extremes in length of Stay at Home orders, not just regionally, but nationwide. See interesting graphics, “Orders by trifeca status” at Ballotopedia.,_2020

New Mexico Gov Michelle Lujan-Grisham’s order to Stay at Home started, early for the nation, on 24 Mar 2020, and MLG was dead last to end it after 252 oppressive days, on 30 Nov.

Utah’s Gov Gary Herbert and six other (Republican trifecta) states issued no-such orders and stayed free with 0 days of lockdown at home.

California Gov Gavin Newsom was first in nation to issue a stay-at-home order, 5 days before MLG,, but his was only 153 days long, shorter than MLG’s by 99 days.

The next longest in the region? Not even close at 46 days by Gov Doug Ducey’s for Arizona. Then Gov Steve Sisolak’s order for Nevada at 45 days.

Like you say, divergent state policies long before COVID affect the rate of recovery of adult workers since then. But governors, not legislatures nor courts are uniquely responsible for the length of lockdown. One could argue that students’ education achievement gap is even more directly tied to the Governor’s lockdown orders. So I look forward to your analysis of the regional education achievement gap.

We haven’t recovered after the shut downs imposed by MLG. She boasts economic recovery, but it’s false. People are still unemployed, businesses are still shorthanded, and NM is a poor state. Our food, real estate, and gas are insanely expensive. We’re 51st in education, our children haven’t recovered from the shut downs either.

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