Working Paper Revision

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

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: consumer expectations; survey; COVID-19; large shock; monetary policy; uncertainty;

JEL Classification: C83; E43; E52;

https://doi.org/10.26509/frbc-wp-202012r

Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Working Papers

Publication Date: 2021-12-22

Number: 20-12R

Related Works

• Working Paper Revision (2021-12-22) : You are here.
• Working Paper Original (2020-04-09) : News and Uncertainty about COVID-19: Survey Evidence and Short-Run Economic Impact