The Economic Impacts of COVID -19: Evidence from a New

Raj Chetty, HarvardJohn N. Friedman, BrownNathaniel Hendren, HarvardMichael Stepner, University of Torontoand the Opportunity Insights Team

April 2021

The Economic Impacts of COVID -19:Evidence from a New Public DatabaseBuilt Using Private Sector Data

§ How has COVID-19 affected the American economy?

§ Since Kuznets (1941), macroeconomic policy decisions have been based on data from surveys of households and businesses

§ These data provide vital aggregate information (GDP, unemployment rates), but have two limitations

1. Available only at low frequencies, sometimes with significant lags2. Cannot be disaggregated to examine variation across areas or subgroups

à We build a new publicly available database using transaction data from private companies to address these challenges and apply it to analyze the impacts of COVID-19

Measuring the Impacts of Macroeconomic Shocks and Policies

Data Construction

DataCase Study:

StimulusImpacts of COVID-19

§ Many papers have used transaction data to analyze economic impacts of COVID crisis[e.g., Alexander & Karger 2020, Baker et al. 2020, Bartik et al. 2020, Cajner et al. 2020, Chen et al. 2020, Chiou & Tucker 2020, Cox et al. 2020, Kurman et al. 2020, Kahn et al. 2020, Autor et al. 2020, Granja et al. 2020, Mongey et al. 2020]

§ Here, we construct and analyze public statistics based on private sector data rather than directly analyzing confidential sources of microdata

§ All series used in what follows are freely downloadable at www.tracktherecovery.org

§ Key challenge: constructing public statistics that are sufficiently granular for research yet sufficiently aggregated and masked to protect privacy

A New Public Database Built From Private Sector Data

http://www.tracktherecovery.org/

Consumer Spending

Small Business Revenues

Employment

Job Postings

Education

Data Partners

Consumer Spending BenchmarkingCredit/Debit Card Data (Affinity Solutions) vs. National Accounts (Advance Monthly Retail Trade Survey)

Change in Consumer SpendingRelative to January

Retail

RMSE = 6.01 p.p.-50%

-25%

0%

+25%

+50%

January2019

April July October January2020

April July October January2021

Affinity

NationalAccounts

Affinity

NationalAccounts

Food and Accommodation

RMSE = 5.59 p.p.

Impacts of COVID-19

DataCase Study:


Changes in Small Business Revenues from January to April 2020 by ZIP CodeSan Francisco

Changes in Small Business Revenues vs. Rent, by ZIP CodeFrom January to April 2020

Slope = -13% per $1000 (s.e. = 0.38)-60%

-50%

-40%

-30%

-20%

$500 $1,000 $1,500 $2,000

Median Two Bedroom Monthly Rent in 2018

Change in Small Business RevenueRelative to January

Changes in Bottom Quartile Employment Rates from January to April 2020 by ZIP CodeSan Francisco

Apr 15 June 10 Feb 27

-28%(8.9m)

-36%(11.6m jobs)

-24%(7.8m)

-40%

-30%

-20%

-10%

0%

Jan 12020

Mar 1 May 1 Jul 1 Sep 1 Nov 1 Jan 12021

Employment Changes by Income Quartile

Mar 1

Change in EmploymentRelative to January

Bottom Income Quartile

-28%(8.9m)

-8%(2.7m)

-4%(1.2m)

0%(0.1m)

-36%(11.6m jobs)

-27%(8.5m)

-19%(6.1m)

-13%(4.2m)

-24%(7.8m)

-15%(4.8m)

-8%(2.7m)

-3%(0.8m)

-40%

-30%

-20%

-10%

0%

Jan 12020

Mar 1 May 1 Jul 1 Sep 1 Nov 1 Jan 12021

Top Income Quartile

Employment Changes by Income Quartile

Mar 1

Change in EmploymentRelative to January

Bottom Income Quartile

Second Quartile

Third Quartile

Apr 15 June 10 Feb 27

+25%

-40%

-30%

-20%

-10%

0%

+10%

+20%

+30%

+40%

Change Relative toJanuary 2020

Feb 12020

Mar 1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov 1 Dec 1 Jan 12021

Feb 1

National Trends in Consumer Spending vs. Employment RatesRetail Trade

Consumer Spending

+25%

–30%

–2%

-40%

-30%

-20%

-10%

0%

+10%

+20%

+30%

+40%

Change Relative toJanuary 2020

Feb 12020

Mar 1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov 1 Dec 1 Jan 12021

Feb 1

National Trends in Consumer Spending vs. Employment RatesRetail Trade

Consumer Spending

Top Wage QuartileEmployment

Bottom Wage QuartileEmployment

Effects of Stimulus Payments

DataCase Study:


§ Coronavirus Aid, Relief, and Economic Security (CARES) Act of April 2020

§ $1200 checks (phased out at higher incomes, supplement for children)

§ April 15, 2020 deposits for the majority of payments

§ Coronavirus Response and Relief Act of December 2020

§ $600 checks (phased out at higher incomes, supplement for children)

§ January 4, 2021 or January 6, 2021 deposits for the majority of payments

§ Were stimulus payments effective in increasing consumer spending?

Estimating the Effects of Stimulus Payments

4th 7th 10th 13th 4th 7th 10th 13th 16th 19th

December January

Consumer SpendingSeasonally Adjusted

$600 Stimulus ChecksDisbursed on Jan 4

Effect of the January 2021 Stimulus Checks on Daily Consumer Spending

–10 p.p.

0 p.p.

+10 p.p.

+20 p.p.

+30 p.p.

Bottom Income Quartile ZIP CodesMedian Household Income < $46,000

holidayspermutation


December January


Spending Increased 7.9 p.p.(s.e. = 2.2 p.p)



–10 p.p.

0 p.p.

+10 p.p.

+20 p.p.

+30 p.p.


holidayspermutation

December January4th 7th 10th 13th 4th 7th 10th 13th 16th 19th

December January








–10 p.p.

0 p.p.

+10 p.p.

+20 p.p.

+30 p.p.

–10 p.p.

0 p.p.

+10 p.p.

+20 p.p.

+30 p.p.


Top Income Quartile ZIP CodesMedian Household Income > $78,000

holidayspermutation

December January4th 7th 10th 13th 4th 7th 10th 13th 16th 19th

December January








–10 p.p.

0 p.p.

+10 p.p.

+20 p.p.

+30 p.p.

–10 p.p.

0 p.p.

+10 p.p.

+20 p.p.

+30 p.p.


Top Income Quartile ZIP CodesMedian Household Income > $78,000

Difference between Q1 and Q4 estimate = 7.7 p.p. (p < 0.01)holidayspermutation

$126$140

$90

$45

0

50

100

150

200

COVID Relief Act (January 2021)

Consumer SpendingEstimate of 1-monthspending per $600

Effect of the COVID Stimulus Bills on Spending, by Income Group

<$46,000 $46,000 to $59,000 $59,000 to $78,000 >$78,000

ZIP Code Median Household Income

$189

$225 $229 $235

$126$140

$90

$45

0

50

100

150

200

CARES Act (April 2020)




<$46,000 $46,000 to $59,000 $59,000 to $78,000 >$78,000


$0

$1000

$2000

$3000

$4000

January 12020

Mar 15 Apr 15 December 312020

Top Quartile

$2,500

$2,000

$1,300

Estimated Cumulative Increase in SavingsSavings = Earnings + Unemployment Insurance + Stimulus Checks – Spending

Δ Savings Per Personcompared to 2019

$4,000

Bottom Quartile

Q3

Q2

Aug 1

2019 Average: 7.5%

0%

10%

20%

30%

40%

Jan2019

Mar May Jul Sep Nov Jan2020

Mar May Jul Sep Nov Jan2021

Savings Rate

National Personal Savings Rates, from BEA National Accounts

$189

$225 $229 $235

$126$140

$90

$45

0

50

100

150

200

CARES Act (April 2020)




<$46,000 $46,000 to $59,000 $59,000 to $78,000 >$78,000


January 2021Stimulus Policy

Projected Effect of Stimulus Checks on SpendingCouple with No Children

$600

$0 $150,000 $174,000$75,000

$1400

$0 $150,000 $200,000$75,000

Household Income

March 2021Stimulus Policy

Proposal



$600

$0 $150,000 $174,000$75,000

$1400

$0 $150,000 $200,000$75,000

Household Income


Proposal

Fiscal cost = $200 billion

Projected 1-month spendingincrease < $15 billion



$600

$0 $150,000 $174,000$75,000

$1400

$0 $160,000 $200,000$75,000

Household Income


$20 billionreallocated

Conclusion

DataCase Study:


1. Policy: fine tuning based on state of the economy and observed policy impacts

§ Help target proposed $100 billion in job re-training programs, avert jobless recovery

§ New measures for state-contingent policies beyond unemployment rates?

2. Real time national accounts

§ Collaborating with others to construct a more permanent system of granular, high frequency national accounts, building on prototype constructed here

3. Research: we hope these new public data (www.tracktherecovery.org) will be helpful in supporting future work in this recession and beyond

Broader Implications and Future Work

http://www.tracktherecovery.org/

Appendix Slides

DataCase Study:



Effect: 7.9 p.p.

-30%

-20%

-10%

0%

10%

20%

30%

Dec 4 Dec 8 Dec 12 Dec 16 Dec 20 Dec 24 Dec 28 Jan 1 Jan 5 Jan 9 Jan 13 Jan 17


Effect of the Recent Stimulus on Daily Consumer SpendingIncome Quartile 1

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Effect of the Recent Stimulus on Daily Consumer SpendingIncome Quartile 4


Effect: 0.2 p.p.

-30%

-20%

-10%

0%

10%

20%

30%

Dec 4 Dec 8 Dec 12 Dec 16 Dec 20 Dec 24 Dec 28 Jan 1 Jan 5 Jan 9 Jan 13 Jan 17

back

back

0

.1

.2

.3

.4Fr

acti

on o

f Es

tim

ates

-10 -5 0 5 10Triple-Diff Estimate

Triple Difference BetweenQ1 and Q4 Spending: 7.7 pp

Permutation Test for Difference between Q1 and Q4 Spending

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The Economic Impacts of COVID -19: Evidence from a New