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The 10 US cities where a COVID-19 financial recovery will be the hardest

The 10 US cities where a COVID-19 financial recovery will be the hardest
The 10 US cities where a COVID-19 financial recovery will be the hardest

Every part of the country has been hit hard by the coronavirus and resulting lockdown. How fast cities recover from that blow will help determine which economies take the lead in the future.

To find out which places will bounce back and which will flounder, the financial services company Moody’s Analytics examined the top 100 metropolitan areas in the U.S. based on two key criteria.

Cities gained points for having a lot of jobs that require a college or graduate degree; Moody’s expects higher pay will be key to retaining and attracting residents. Meanwhile, cities lost points for population density, which is a liability when it comes to contagious diseases.

After crunching the numbers, these are the 10 cities that ended up on the bottom. Moody’s presented them in alphabetical order.

1. Detroit

car Assembly at the plant
Sergey Merzliakov / Shutterstock

The shrinking city of Detroit didn’t need any more trouble, but it’s taking a beating from the coronavirus. The city has more than 10,000 confirmed cases of COVID-19, roughly 20% of Michigan’s count, despite accounting for only 6.7% of the state’s population.

Detroit was in an economic tailspin for decades amid the downturn in U.S. manufacturing and filed for bankruptcy in 2013. So the city wasn’t in the strongest position when the coronavirus froze production at the plants of the three big Detroit automakers: General Motors, Ford and Fiat Chrysler.

Mass layoffs and furloughs followed.

Those plants tentatively returned to life in mid-May, but concerns remain about safety protocols, supply chain problems and consumer demand. Even if Detroit is poised for recovery, it’s unclear how far that recovery will go.

2. Honolulu

Panoramic view of Waikiki Beach and Diamond Head in Honolulu, Hawaii, USA
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Compared to other areas of the country, isolated Hawaii hasn’t seen nearly as many people fall ill. Yet the island state will face a number of unique roadblocks on the way to recovery.

Honolulu is the epicenter of the state’s coronavirus outbreak, hosting the majority of Hawaii's confirmed cases. Much of the city’s economy is based on tourism and hospitality, sectors that may be in shambles for years to come. Displaced workers will have to keep on top of online job boards to find new careers.

Amid strict quarantine measures, the number of people flying to the islands has crashed from more than 30,000 per day to just a few hundred. The University of Hawaii’s Economic Research Organization (UHERO) estimates that over half of the jobs lost in April — 116,000 of 220,00 — were due to the drop in tourism.

Even if tourists are allowed back by the summer, UHERO expects arrivals will only recover to half their former number by the end of the year.

3. Los Angeles

Hollywood boulevard sign, with palm trees in the background
Andrey Bayda / Shutterstock

There won’t be many tourists visiting Universal Studios or the Hollywood Walk of Fame any time soon — and that’s going to be a big problem for Los Angeles.

Despite its sprawl, Los Angeles is part of the most dense urbanized area in America, so it already faces serious problems when it comes to social-distancing measures. Add in an economy that relies heavily on tourism, entertainment and international trade, and the outlook is grim.

Even when the economy opens up, the city that attracted millions of visitors every year isn’t going to look the same.

Gov. Gavin Newsom says California will keep harsh restrictions in place for the foreseeable future — picture half-empty restaurants with servers in masks and gloves handing you a disposable menu. Many residents will have to find gig work to make ends meet.

4. McAllen, Texas

rio grande texas usa mexico border
digidreamgrafix / Shutterstock

McAllen is the second-largest city in the Rio Grande Valley and sits less than an hour’s drive from the Hidalgo border crossing station to Mexico. Mandatory closures, layoffs and the demise of nonessential travel across the border have been wreaking havoc on the economy in this border city.

Over 100,000 workers were laid off, furloughed or saw reduced hours in the city and its surrounding area. Though local businesses are slowly reopening, 84% reported suffering a significant financial blow.

“McAllen is more densely populated than most areas with [a lot of] poverty and low degrees of educational attainment,” Adam Kamins, the author of the Moody’s report, told Forbes.

Before the coronavirus, a quarter of the city’s residents were already in poverty, struggling with debt and basic living costs.

5. Miami

Miami Beach, Florida, USA on Ocean Drive at sunset.
Sean Pavone / Shutterstock

The pandemic has robbed South Florida’s “Magic City” of some of its sparkle, and getting it back will be a challenge, Moody’s says.

A key reason is that Miami is heavily dependent on tourism, which contributes nearly $18 billion a year to the local economy. Miami won’t come back until travel does.

The city is a major cruise port and the hometown of both Carnival Corp. and Royal Caribbean, cruise lines that are under an industrywide “no sail order” that the Centers for Disease Control has put in place through at least July 24. Executives say putting the ships back out on the water depends on many factors, including the development of a vaccine.

Miami’s hot, humid weather also will hamper its recovery because the locals tend to spend a lot of time in the air-conditioned indoors — where COVID-19 spreads more easily.

6. New Haven, Connecticut

Yale university buildings in spring blue sky in New Haven, CT USA
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Although projections from Moody’s show that college towns are well-positioned to cope with the pandemic, it may not be so easy for New Haven, home of Yale University.

New Haven has the third-highest population density in Connecticut, which itself is the fourth most densely populated state in America. New Haven County currently accounts for more than a quarter of Connecticut’s confirmed cases.

The unemployment crisis has left many American families unable to afford the rising cost of tuition, especially at Ivy League schools like Yale. Undergraduate tuition for the 2020-2021 school year runs $57,700 — or $74,900 with room and board.

Additionally, travel restrictions have put a huge dent in the enrollment of international students, who are critical to the bottom line of U.S. colleges. They typically don’t have access to financial assistance, so they pay full price.

7. New York

Used glove on empty street of New York City during Coronavirus quarantine lockdown
Photo Spirit / Shutterstock

One of the world’s most bustling metropolises has ground to a halt since early March. New York City has been the epicenter of the coronavirus outbreak in the U.S., with more than 200,000 confirmed cases and more than 20,000 deaths.

“New York City’s greatest asset is a large, skilled workforce that is drawn to the fast-paced and highly interactive nature of life in the Big Apple,” Kamins wrote in his report. “But activities such as riding the subway, dining in crowded restaurants and attending Broadway shows may be viewed as inherently risky for some time.”

In April, Mayor Bill de Blasio said New York City stands to lose $7.4 billion in tax revenue and begged the federal government for a bailout. The “great economic leader and engine of this nation” is too important to ignore, he argued.

“If we can't provide the basics for our people, then you can kiss your recovery goodbye,” de Blasio said.

8. Philadelphia

Philadelphia panorama cityscape downtown urban core skyscrapers over the Schuylkill River in Pennsylvania USA
AevanStock / Shutterstock

The home of Rocky Balboa may not be able to take this one on the chin. Despite launching a COVID-19 Recovery Office to appeal for federal support, Mayor Jim Kenney fears the city “may never fully recover” from the economic fallout.

The city’s layout counts against it here. The Philadelphia region is one of the most densely populated in the country, with nearly 12,000 people packed into each square mile.

The disruption is poised to have an oversized impact on the city’s budget. Unlike other cities that rely on property taxes for their revenue, Philly leans heavily on its wage tax — and the legions of the unemployed are no longer contributing to city coffers.

Combined with other stresses, that could leave a $650 million hole in the city’s budget.

9. Stockton, California

Waterfront Cityscape of All American City Award Recipient, Stockton, California, Reflected in River at Weber Point
Terrance Emerson / Shutterstock

This struggling city in California’s Central Valley had its heyday during and after the gold rush of the 1800s and was once the state’s third-largest city.

The metro area is now the 12th-largest in California and has high rates of unemployment and crime. The jobless rate was 8.3% in March, ahead of most of the coronavirus shutdowns, and Stockton has been named one of America's most dangerous cities by multiple studies.

The city also is densely populated, which will make for a difficult recovery because there's "more risk," says study author Kamins.

“We think that in the aftermath of COVID-19 or even while the pandemic is still going on over the next couple of years, potentially, if there's no vaccine, that these are areas that might be less attractive,” he told Forbes.

10. Tampa, Florida

Tampa, Florida, USA downtown skyline.
Sean Pavone / Shutterstock

Tampa has weathered its fair share of storms over the years, but nothing has rained down on the Big Guava quite like this.

Tourism is the lifeblood of the city's economy, and since the pandemic began the Florida tourism and hospitality industries have suffered unprecedented losses. The Tampa Bay Times reports hotel stays in the area have dropped by 40% compared to the same time last year.

Tampa also makes the Moody's list because the city’s unemployment rate has skyrocketed to 13.1%, leaving more than 187,000 residents out of work. And to make matters worse, Florida’s glitchy unemployment system has kept many residents from claiming their benefits.

State officials fear it may take several years for tourism in Florida to recover, which means Tampa’s losses won’t be short-lived.