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

By Raj Chetty, John N. Friedman, Nathaniel Hendren, Michael Stepner. 2020

153 citations recorded by the source corpus.

We build a publicly available database that tracks economic activity at a granular level in real time using anonymized data from private companies. We report daily statistics on consumer spending, business revenues, employment rates, and other key indicators disaggregated by ZIP code, industry, income group, and business size. Using these data, we study how COVID-19 a?ected the economy by analyzing heterogeneity in its impacts. We ?rst show that high-income individuals reduced spending sharply in mid-March 2020, particularly in areas with high rates of COVID-19 infection and in sectors that require in-person interaction. This reduction in spending greatly reduced the revenues of small businesses in a?uent ZIP codes. These businesses laid o? many of their employees, leading to widespread job losses especially among low-wage workers in a?uent areas. High-wage workers experienced a “V-shaped” recession that lasted a few weeks, whereas low-wage workers experienced much larger job losses that persisted for several months. Building on this diagnostic analysis, we estimate the causal e?ects of policies aimed at mitigating the adverse impacts of COVID-19. State-ordered reopenings of economies had small impacts on spending and employment. Stimulus payments to low-income households increased consumer spending sharply, but little of this increased spending ?owed to businesses most a?ected by the COVID-19 shock, dampening its impacts on employment. Paycheck Protection Program loans increased employment at small businesses by only 2%, implying a cost of $377,000 per job saved. These results suggest that traditional macroeconomic tools – stimulating aggregate demand or providing liquidity to businesses – have diminished capacity to restore employment when consumer spending is constrained by health concerns. During a pandemic, it may be more fruitful to mitigate economic hardship through social insurance. More broadly, this analysis shows how public statistics constructed from private sector data can support many research and policy analyses without compromising privacy, providing a new tool for empirical macroeconomics.

Subfields: Economics and Econometrics, General Health Professions, Modeling and Simulation

View Paper: https://www.semanticscholar.org/paper/82050cc383912ca357774a2d1d7495cb1f26dc3b

Citations in the corpus

• Bank liquidity provision across the firm size distribution (2020, unknown): “32 32 Consistent with a substantial part of PPP being used to strengthen firms’ balance sheets, Granja et al. (2020) and Chetty et al. (2020) provide evidence that the program did not have an immediate impact on payrolls.”
• The Impact of Covid-19 on Productivity (2020, unknown): “Baqaee and Farhi (2022) show that negative sectoral supply shocks can be stagflationary and can be amplified by complementarities in production, Chetty et al. (2020), Forsythe et al. (2020) and Cajner et al. (2020) show large and heterogeneous labor 6 It is perhaps odd to think of the pandemic as…”
• Sheltering in place and domestic violence: Evidence from calls for service during COVID-19 (2020, unknown): “The majority of CARES Act stimulus checks went out in themiddle of week 15, on April 15, 2020 andmay have provided some relief from financial strain (Chetty et al., 2020).”
• Heterogeneous Labor Market Impacts of the COVID-19 Pandemic (2020, unknown): “…Coibion, Gorodnichenko, and Weber (2020), who used data from the Nielsen Homescan panel; Bartik et al. (2020), who used data from Homebase; and Chetty et al. (2020), who built a database that tracks economic activity at a granular level in real time using anonymized data from various private…”