News and Uncertainty about COVID-19: Survey Evidence and Short-Run Economic Impact
45 Pages Posted: 15 Apr 2020 Last revised: 27 Dec 2021
Date Written: December 22, 2021
A tailor-made survey documents consumer perceptions of the U.S. economy’s response to a large shock: the advent of the COVID-19 pandemic. The survey ran at a daily frequency between March 2020 and July 2021. Consumer perceptions regarding output and inflation react rapidly. Uncertainty is pervasive. A business-cycle model calibrated to the consumer views provides an interpretation. The rise in household uncertainty amplifies the pandemic recession by a factor of three. Different perceptions about monetary policy can explain why consumers and professional forecasters agree on the recessionary impact, but have sharply divergent views about inflation.
Keywords: COVID-19, consumer expectations, survey, news shocks, uncertainty, monetary policy
JEL Classification: C83, E43, E52
Suggested Citation: Suggested Citation