Florida vs. California Economies: How COVID Restrictions Have Impacted The Two States

California and Florida — the first- and third-most populated states, respectively — have instituted distinctly different social restrictions to deal with the pandemic.

A look at the case rates and the economies of both states may provide an understanding of which approach has worked better.

Florida

Left-leaning magazine The New Republic on Tuesday named Republican Gov. Ron DeSantis as its “Scoundrel of the Year” in part for his less-than-strict guidelines to control the spread of COVID-19.

The Tampa Bay Times on Wednesday reported that it appeared Florida’s economy was recovering from the spring downturn when the spike in cases of COVID-19 was just beginning. Federal data show GDP shrank 4.3% during the first quarter, relative to 5.1% growth during the same period last year.

The Times noted that unemployment is half what it was in March, though recovery is somewhat uneven. White-collar workers escaped largely unscathed in the new work-from-home environment, but those in the service and tourism sectors aren’t so lucky.

“One of the main economic themes that has emerged during the pandemic is inequality,” the report read.

Struggles for low-income classes were supported by the Federal Reserve Bank of Atlanta, which includes Florida in its district. In November, the bank found that finances for low- to middle-income families had deteriorated during the pandemic.

Florida real estate, meanwhile, is recovering. Data show more than 27,000 new homes were sold in November, compared to around 19,600 in March. Travel, however, is lower despite a surge in holiday travel, given reduced capacity as attractions like Disney World. Tax revenue is about 20% less than it was in January.

DeSantis said that despite the many challenges, 2020 saw record-level investments in education and environmental stewardship.

“As we look toward 2021, I believe Floridians have reason to be optimistic,” he said in a statement.

California

Western state economies tend to perform somewhat better than those in the south, particularly considering the chronic lackluster growth for states such as Alabama and Mississippi. Counting Alaska and Hawaii, the five westernmost states in the country combined for 3.4% growth in 2019, compared with 2% growth for the south.

Federal data show California recording 31.2% growth in the third quarter, more or less erasing the contraction from the previous term. Like Florida, California saw a 4.3% economic contraction in the first quarter. But first-quarter GDP lagged behind Florida in 2019, with growth of 3.6%.

California, which represents the fifth-largest economy in the world, has the nation's strictest COVID measures, a situation compounded by savage wildfires this year.

New cases of COVID-19 in the state continue to test its economy. State-level unemployment is high given the tight restrictions, at around 8%.

Sun Wong Sohn, an economics professor at Loyola Marymount University, told the Sacramento Bee recently that things may get worse before they get better.

"This is the calm before the storm," he said.

In a state-by-state comparison during the summer, National Public Radio noted that California in January was anticipating a $5.6 billion surplus that quickly turned into a $54 billion deficit because of the pandemic.

The Beige Book, a summary of economic conditions across the country, in November found a mixed bag for California. Retail sales posted gains, but that was likely because of the early start to the holiday shopping season. The Federal Reserve Bank of San Francisco noted, however, there may be some brain-drain in the state as some people leave the region voluntarily in part due to fear of contracting the virus.

But like Florida, the state economic situation is lopsided. Gov. Gavin Newsom’s social restrictions limit operations at places like hair salons and restaurants, but white color jobs in the tech-heavy Silicon Valley are secured by the ability to work from home.

Newsom, a Democrat, said the state was primed for a comeback.

“While the COVID-19 pandemic has greatly impacted our economy, California will bounce back thanks to our incredible assets and our spirit of innovation,” he stated.

COVID-19 Cases

Florida reported a new-case positivity rate of nearly 22.75% on Tuesday, compared with 8.15% on Nov. 28. California, meanwhile, posted a positivity rate of 12.2% on Tuesday, compared with 6.2% on Nov. 29.