The oil and gas and hospitality industries are among the most vulnerable.
Topline: As the rapidly-spreading coronavirus continues to take its toll on the American economy—with the airline industry in crisis, oil prices plummeting, and the stock market more volatile than ever—a new report from Brookings has identified the cities that will be most vulnerable to a recession sparked by the virus.
- More than 24 million Americans work in the five sectors (identified by Moody’s chief economist Mark Zandi) that are at the highest risk for a major slowdown in the United States: mining/oil and gas, transportation, employment services, travel arrangements, and leisure and hospitality.
- “The most affected places are a who’s who of energy towns and major resort, leisure, and amusement destinations across the nation,” the report says.
- Midland, Texas is the most exposed city in the country; it’s a cornerstone of the oil and gas industry with 42% of its workforce in high-risk industries.
- Kahului, Hawaii; Atlantic City, New Jersey; and Las Vegas, Nevada are next on the list: they all rely heavily on leisure and hospitality, and each has more than a third of its workforce in the industries that would be most vulnerable to a slowdown.
- Odessa, Texas—another oil town—is fifth on the list.
- The metro areas that are least likely to be affected, Brookings says, include “older, manufacturing-heavy industrial cities, agricultural towns, and some already-distressed places” like Madera, California; Yakima, Washington and Elkhart-Goshen, Indiana.
Key background: Stocks plunged on Wednesday, reaching a new crisis low below January 2016 levels when Trump first took office, as the coronavirus pandemic continued to take a toll on markets and inflict damage to the U.S. economy. On Monday, President Trump said the coronavirus could last longer than expected, and that the U.S. could face a recession despite the Fed’s massive interest rate cut over the weekend. Oil also took a major hit on Wednesday as an all-out price war between Saudi Arabia and Russia showed no signs of abating.
Further reading: Businesses have already started laying off workers as a result of the slowdown. Hotel giant Marriott International said tens of thousands of hotel workers will be furloughed and a number of those workers will be laid off, and Danny Meyer’s Union Square Hospitality Group laid off 3,000 workers—80% of its workforce. Forbes is tracking layoffs related to the coronavirus here.