Using the Eye of the Storm to Predict the Wave of COVID-19 UI Claims

18 Pages Posted: 18 Apr 2020 Last revised: 23 Nov 2020

See all articles by Daniel Aaronson

Daniel Aaronson

Federal Reserve Bank of Chicago

Scott A. Brave

Federal Reserve Bank of Chicago

R. Andrew Butters

Indiana University

Daniel W. Sacks

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Boyoung Seo

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Multiple version iconThere are 2 versions of this paper

Date Written: April 16, 2020

Abstract

We leverage an event-study research design focused on the seven costliest hurricanes to hit the US mainland since 2004 to identify the elasticity of unemployment insurance filings with respect to search intensity. Applying our elasticity estimate to the state-level Google Trends indexes for the topic “unemployment,” we show that out-of-sample forecasts made ahead of the official data releases for March 21 and 28 predicted to a large degree the extent of the COVID-19 related surge in the demand for unemployment insurance. In addition, we provide a robust assessment of the uncertainty surrounding these estimates and demonstrate their use within a broader forecasting framework for US economic activity.

Keywords: Unemployment Insurance, Google Trends, Hurricanes, Search, Unemployment, Covid-19

JEL Classification: H12, J65, C53

Suggested Citation

Aaronson, Daniel and Brave, Scott A. and Butters, R. and Sacks, Daniel W. and Seo, Boyoung, Using the Eye of the Storm to Predict the Wave of COVID-19 UI Claims (April 16, 2020). Kelley School of Business Research Paper No. 2020-68, Available at SSRN: https://ssrn.com/abstract=3561298 or http://dx.doi.org/10.2139/ssrn.3561298

Daniel Aaronson

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604-1413
United States

Scott A. Brave

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

R. Butters (Contact Author)

Indiana University ( email )

1309 E. Tenth St.
Bloomington, IN 47405
United States

HOME PAGE: http://https://kelley.iu.edu/BEPP/faculty/page14113.cfm?ID=46947

Daniel W. Sacks

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States

Boyoung Seo

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Bloomington, IN 47405
United States
812-855-3667 (Phone)

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