EconPapers    
Economics at your fingertips  
 

The cost of the COVID-19 crisis: Lockdowns, macroeconomic expectations, and consumer spending

Olivier Coibion, Yuriy Gorodnichenko and Michael Weber

Journal of Economic Behavior & Organization, 2025, vol. 229, issue C

Abstract: We study how the differential timing of local lockdowns due to COVID-19 causally affects households’ spending and macroeconomic expectations at the local level using several waves of a customized survey with more than 10,000 respondents. About 50 % of survey participants reported income and wealth losses due to the corona virus, with the average losses being $5,293 and $33,482 respectively. Aggregate consumer spending dropped by 31 log percentage points with the largest drops in travel and clothing. We find that households living in counties that went into lockdown earlier expected the unemployment rate over the next twelve months to be 13 percentage points higher and continued to expect higher unemployment at horizons of three to five years. They also expected lower future inflation, reported higher uncertainty, expected lower mortgage rates for up to 10 years, and had moved out of foreign stocks into liquid forms of savings. The imposition of lockdowns can account for much of the decline in employment during the crisis as well as declines in consumer spending. While lockdowns had pronounced effects on local economic conditions and households’ expectations, they had little impact on approval ratings of Congress, the Fed, or the Treasury but led to declines in the approval of the President.

Keywords: Subjective expectations; Consumer spending; Labor market; Employment; COVID-19; Surveys (search for similar items in EconPapers)
JEL-codes: C83 D84 E31 J26 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268124004608
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Cost of the COVID-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending (2020) Downloads
Working Paper: The Cost of the COVID-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending (2020) Downloads
Working Paper: The Cost of the COVID-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending (2020) Downloads
Working Paper: The Cost of the COVID-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending (2020) Downloads
Working Paper: The Cost of the Covid-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending (2020) Downloads
Working Paper: The Cost of the Covid-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending (2020) Downloads
Working Paper: The Cost of the COVID-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending (2020) Downloads
Working Paper: The Cost of the Covid-19 Crisis: Lockdowns, Macroeconomic Expectations, and Consumer Spending (2020) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:229:y:2025:i:c:s0167268124004608

DOI: 10.1016/j.jebo.2024.106846

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-31
Handle: RePEc:eee:jeborg:v:229:y:2025:i:c:s0167268124004608