California is Four Months Behind on Reopening

Over the past few months, Governor Gavin Newsom has insisted California’s economy is “roaring back.” But, is it?

First, let’s consider the unemployment rate. “Roaring back” might suggest Californians are finally back to work, but California’s unemployment rate is second-to-last, standing at 7.6% for July 2021. To put this into perspective, the United States has a 5.4% unemployment rate, and Nebraska and Utah have a 2.3% unemployment rate, a third of California’s rate.

Next, consider how many jobs California is creating compared to other states. Back in July, Newsom touted California compared to other states. Sadly, he failed to account for the size of each state when making that claim. When accounting for size, Vermont actually comes out on top, increasing employment by 2.3%, compared to California’s 0.7%.

But, “roaring back” could account for other economic factors. Are people going to restaurants? Are they returning to the office for work? Are people traveling as much as they once did?

Moody’s Analytics and CNN Business have teamed up to create a “Back-to-Normal” index. It considers dozens of indicators, including employment rates, Gross Domestic Product, the number of people going to restaurants, workplace mobility, business confidence and more. This can give us the most approximate “live look” at a state’s economy and how it compares to other states.

A 100% score means the economy has returned to pre-pandemic levels (March 2020). A score below 100% means a state’s economy has still not recovered yet, and scores exceeding 100% indicate the economy has surpassed March 2020 levels.

Only eight states have reached the 100% mark so far, and California is not among them. In fact, with a score of 88.2%, California is one of the states furthest from normal. We are in forty-fourth place, only ahead of Maryland, New Mexico, Hawaii, Illinois, New York, and Louisiana (due to Hurricane Ida). Compared to the United States as a whole, California is about 5% behind.

Source: Moody’s Analytics & CNN Business Back-to-Normal Index

Let’s pick a threshold to show how far behind California is. For the sake of simplicity, let’s choose 90%, a threshold most states have already achieved.

Texas reached 90% back in April, Florida reached it in December of last year, and South Dakota reached it in July of last year. Even New Hampshire, which has significantly lower COVID-19 cases per capita and deaths per capita than California, reached the threshold back in April and is just about to be back to normal. Looking at the United States as a whole, they reached the threshold in May.

If you look at the last time the United States was at California’s current index level of 88.2%, that was on April 24, which means California is four months behind the rest of the country in reopening.

Not only are these numbers showing that Californians are returning to the office, dining out at restaurants, vacationing, and engaging in other normal activities less often than are residents in other parts of the country, but that you do not have to compromise COVID-19 cases for a back-to-normal economy.

One might wonder if states with a greater normalcy rating are seeing spikes in COVID cases, have outlying vaccination rates, or are recklessly rushing their reopenings. But, data doesn’t find much connection at all. More importantly, California’s return to normalcy doesn’t seem to be based on logical indicators, like case rates.

Between May 1 and July 1, California and the United States as a whole reached its lowest COVID-19 rates since the beginning of the pandemic. Nearly all people who wanted to get the vaccine received it by that point, and summer was just about to begin. The Delta variant had not taken hold. During that time, Michigan, which had nearly the same Back-to-Normal Index as California did on May 1, took advantage of the moment and had a 7.2 point jump during that COVID lull. California, on the other hand, went in the other direction, drifting away from normalcy by 0.7%. Many states took advantage of this lull in COVID-19 cases and opened their economies further.

Source: Moody’s Analytics & CNN Business Back-to-Normal Index

We cannot truly feel like we are back to normal if people are still not going to work, not going out to meet friends for lunch, or traveling for vacation. If fear remains, the economy will never get back to normal.

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Brandon Ristoff is a policy analyst for the California Policy Center.