States in fiscal crisis and cuts to basic services loom as coronavirus ravages local economies

States in fiscal crisis and cuts to basic services loom as coronavirus ravages local economies

People wait in line as SF-Marin Food Bank hands out 1600 food bags in San Francisco on April 20, 2020. Work furloughs and layoffs created by coronavirus shelter-in-place orders are driving thousands to seek food assistance.

San Francisco Chronicle | Hearst Newspapers via Getty Images

Economic activity at the state level plunged in the first three months of 2020, according to the U.S. Commerce Department, as the Covid-19 pandemic brought the national economy to a standstill.

In New York and Nevada, where the coronavirus was raging by March, state Gross Domestic Product plunged 8.2% for the quarter, compared to the national drop of 5%. Other big drops included Michigan at 6.8% and Louisiana at 6.2%. Indeed, no state economy grew during the quarter. The smallest drop was Nebraska at 1.3%.

 The Commerce Department said the accommodations and food service industry declined 26.8% nationwide during the quarter, accounting for much of the drop in Nevada. In New York, finance and insurance was the biggest contributor to the state's decline.

 The report shows just how sudden and widespread the effects of the pandemic-related shutdowns were, but it also reflects the huge drop in energy markets due to falling demand and an oil price war between Saudi Arabia