DP16766 News and uncertainty about COVID-19: Survey evidence and short-run economic impact
|Author(s):||Alexander Dietrich, Keith Kuester, Gernot Müller, Raphael Schoenle|
|Publication Date:||December 2021|
|Keyword(s):||Consumer expectations, Large shock, monetary policy, survey, uncertainty|
|JEL(s):||C83, E32, E52|
|Programme Areas:||Monetary Economics and Fluctuations|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=16766|
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.