How Did COVID-19 and Stabilization Policies Affect Spending and Employment? A New Real-Time Economic Tracker Based on Private Sector Data
We build a publicly available platform 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 county, industry, and income group. Using these data, we study the mechanisms through which COVID-19 affected the economy by analyzing heterogeneity in its impacts across geographic areas and income groups. We first 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 physical interaction. This reduction in spending greatly reduced the revenues of businesses that cater to high-income households in person, notably small businesses in affluent ZIP codes. These businesses laid off most of their low-income employees, leading to a surge in unemployment claims in affluent areas. Building on this diagnostic analysis, we use event study designs to estimate the causal effects of policies aimed at mitigating the adverse impacts of COVID. State-ordered reopenings of economies have little impact on local employment. Stimulus payments to low-income households increased consumer spending sharply, but had modest impacts on employment in the short run, perhaps because very little of the increased spending flowed to businesses most affected by the COVID-19 shock. Paycheck Protection Program loans have also had little impact on employment at small businesses. These results suggest that traditional macroeconomic tools – stimulating aggregate demand or providing liquidity to businesses – may 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 illustrates how real-time economic tracking using private sector data can help rapidly identify the origins of economic crises and facilitate ongoing evaluation of policy impacts.
A preliminary draft of this paper was previously circulated as “Real-Time Economics: A New Platform to Track the Impacts of COVID-19 on People, Businesses, and Communities Using Private Sector Data.” We thank Gabriel Chodorow-Reich, Jason Furman, Xavier Jaravel, Lawrence Katz, Emmanuel Saez, Ludwig Straub, and Danny Yagan for helpful comments. We also thank the corporate partners who provided the underlying data used in the Economic Tracker, who as of this version include: Affinity Solutions (especially Atul Chadha and Arun Rajagopal), Burning Glass (especially Anton Libsch and Bledi Taska), Earnin (especially Arun Natesan and Ram Palaniappan), Homebase (especially Ray Sandza and Andrew Vogeley), Intuit (especially Christina Foo and Krithika Swaminathan), Womply (especially Toby Scammell and Ryan Thorpe), and Zearn (especially Billy McRae and Shalinee Sharma). We are very grateful to Ryan Rippel of the Gates Foundation for his support in launching this project and to Gregory Bruich for early conversations that helped spark this work. The work was funded by the Chan-Zuckerberg Initiative, Bill & Melinda Gates Foundation, Overdeck Family Foundation, and Andrew and Melora Balson. The project was approved under Harvard University IRB 20-0586. †The Opportunity Insights Economic Tracker Team consists of Matthew Bell, Gregory Bruich, Tina Chelidze, Lucas Chu, Westley Cineus, Sebi Devlin-Foltz, Michael Droste, Shannon Felton Spence, Dhruv Gaur, Federico Gonzalez, Rayshauna Gray, Abby Hiller, Matthew Jacob, Tyler Jacobson, Margaret Kallus, Laura Kincaide, Cailtin Kupsc, Sarah LaBauve, Maddie Marino, Kai Matheson, Kate Musen, Danny Onorato, Sarah Oppenheimer, Trina Ott, Lynn Overmann, Max Pienkny, Jeremiah Prince, Daniel Reuter, Peter Ruhm, Emanuel Schertz, Kamelia Stavreva, James Stratton, Elizabeth Thach, Nicolaj Thor, Amanda Wahlers, Kristen Watkins, Alanna Williams, David Williams, Chase Williamson, Shady Yassin, and Ruby Zhang. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
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