News and Uncertainty about COVID-19: Survey Evidence and Short-Run Economic Impact

45 Pages Posted: 15 Apr 2020 Last revised: 27 Dec 2021

See all articles by Alexander Dietrich

Alexander Dietrich

University of Tübingen

Keith Keuster

University of Bonn

Gernot J. Müller

University of Tuebingen - Department of Economics

Raphael Schoenle

Brandeis University

Multiple version iconThere are 2 versions of this paper

Date Written: December 22, 2021

Abstract

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

Dietrich, Alexander and Kuester, Keith and Müller, Gernot J. and Schoenle, Raphael, News and Uncertainty about COVID-19: Survey Evidence and Short-Run Economic Impact (December 22, 2021). FRB of Cleveland Working Paper No. 20-12R, Available at SSRN: https://ssrn.com/abstract=3573123 or http://dx.doi.org/10.2139/ssrn.3573123

Alexander Dietrich

University of Tübingen ( email )

Tübingen, 72074
Germany

Keith Kuester

University of Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

Gernot J. Müller

University of Tuebingen - Department of Economics ( email )

Mohlstrasse 36
D-72074 Tuebingen, 72074
Germany

Raphael Schoenle (Contact Author)

Brandeis University ( email )

Waltham, MA 02454
United States

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