Uncertainty about own-firm sales growth rates over the year ahead roughly doubled in reaction to the COVID shock, according to our surveys of U.S. and U.K. business executives. Firm-level uncertainty receded after spring 2020 but remains much higher than pre-COVID levels. Moreover, the nature of firm-level uncertainty has shifted greatly since the pandemic struck: Initially, business executives perceived an enormous increase in downside uncertainty, which has now dissipated. As of October 2021, almost all of the extra firm-level uncertainty is to the upside. In short, economic uncertainty associated with the pandemic has morphed from a tale of the lower tail into a tale about the upper tail.
Bunn, Philip and Altig, David and Altig, David and Anayi, Lena and Barrero, Jose Maria and Bloom, Nicholas and Davis, Steven J. and Meyer, Brent H. and Mihaylov, Emil and Mizen, Paul and Thwaites, Greg, COVID-19 Uncertainty: A Tale of Two Tails (November 16, 2021). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2021-135, Available at SSRN: https://ssrn.com/abstract=3965088 or http://dx.doi.org/10.2139/ssrn.3965088