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Journal Article
Disruptions to Starting a Business during COVID-19
Applications to start new businesses tanked from mid-March through May, contracting more severely than during the 2008–2009 financial crisis. Since then, however, applications have recovered so strongly that the total number filed in 2020 should be similar to that for 2019, even if applications growth reverts to the average lows experienced during the early days of the pandemic. This should result in only a modest loss of new businesses and is not likely to cause much additional strain on overall jobs and productivity gains.
Journal Article
Impacts of COVID-19 on Nonprofits in the Western United States
Nonprofit organizations play an important role in the response to COVID-19, but the crisis is straining their ability to serve communities. This report summarizes data from a Federal Reserve survey to assess the impact of the pandemic on nonprofit respondents and the communities they serve in the Western United States.
Journal Article
The Mental Health Implications of COVID-19 on Low-Income Communities and Communities of Color
Shelter-in-place and social distancing measures have been critical for “flattening the curve” and managing the spread of COVID-19, but the sudden shock to our economic and social lives is raising concerns about the need to “flatten the second curve” of mental and behavioral health issues. A new report in JAMA Internal Medicine warns, “In the context of the COVID-19 pandemic, it appears likely that there will be substantial increases in anxiety and depression, substance use, loneliness, and domestic violence; and with schools closed, there is a very real possibility of an epidemic of ...
Journal Article
Temporary Layoffs and Unemployment in the Pandemic
Temporary layoffs accounted for essentially the entire increase in unemployment to its historically high rate in April 2020. Although the rate has come down since its peak, unemployment remains well above pre-pandemic levels. There is little evidence that temporary layoffs are becoming permanent at a higher rate than in the past. However, the continuation of the health and economic crisis poses a risk that a growing share of unemployment will consist of people in persistent categories of joblessness, thereby slowing the overall recovery.
Journal Article
COVID-19 and CO2
One potential side effect from the rapid decline of global economic activity since the worldwide pandemic is a reduction in carbon dioxide emissions. Historically, CO2 emissions rise and fall in tandem with economic activity in the short run. Since the industries most affected by the downturn also produce the most CO2, emissions could drop more than output this time around. However, without substantial and sustained changes in energy sources and efficiency, the concentration of CO2 in the atmosphere—the relevant factor causing climate change—will continue on its upward trajectory.
Journal Article
Monitoring the Inflationary Effects of COVID-19
Inflation fell dramatically following the onset of the COVID-19 pandemic. Dividing the underlying price data according to spending category reveals that a majority of the drop in core personal consumption expenditures inflation comes from a large decline in consumer demand. This demand effect far outweighs upward price pressure from COVID-related supply constraints. A new monthly data page from the San Francisco Fed tracks how sensitivity to the economic disruptions of COVID-19 affects different categories of inflation over time.
Working Paper
The Impact of COVID on Potential Output
The level of potential output is likely to be subdued post-COVID relative to its previous estimates. Most clearly, capital input and full-employment labor will both be lower than they previously were. Quantitatively, however, these effects appear relatively modest. In the long run, labor scarring could lead to lower levels of employment, but the slow pre-recession pace of GDP growth is unlikely to be substantially affected.
Journal Article
Assessing Recent Stock Market Valuation with Macro Data
History suggests that elevated values of the cyclically adjusted price-earnings (CAPE) ratio may indicate an overvalued stock market. A valuation model that uses a small set of economic variables can help account for movements in the CAPE ratio over the past six decades. One of these variables is a macroeconomic uncertainty index. Comparing the model’s prediction for the second and third quarters of 2020 to the 2008–2009 period suggests that investors have reacted to macroeconomic uncertainty very differently during the COVID-19 outbreak than they did during the financial crisis.
Working Paper
Weather, Social Distancing, and the Spread of COVID-19
Using high-frequency panel data for U.S. counties, I estimate the full dynamic response of COVID-19 cases and deaths to exogenous movements in mobility and weather. I find several important results. First, weather and mobility are highly correlated and thus omitting either factor when studying the COVID-19 effects of the other is likely to result in substantial omitted variable bias. Second, temperature is found to have a negative and significant effect on future COVID-19 cases and deaths, though the estimated effect is sensitive to which measure of mobility is included in the regression. ...
Journal Article
How Should Monetary Policy Respond to a Contraction in Labor Supply?
Conventional wisdom holds that a central bank should tighten monetary policy after a surprise decline in labor supply to offset the inflationary effects of the decline. However, this policy prescription comes from models of monetary policy that abstract from labor force participation. We examine the policy implications of worker entry into and exit from the labor force. We find that cyclical changes in labor force participation call for a less restrictive policy response to a decline in labor supply. The less restrictive policy response is appropriate because policy tightening reduces the ...