IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/333259.html
   My bibliography  Save this paper

Effects of Covid on the U.S. economy: update after 4 quarters of data

Author

Listed:
  • Dixon, Peter
  • Rimmer, Maureen
  • Giesecke, James A.

Abstract

This paper describes an ongoing project in which we apply a quarterly version of the USAGE model to generate forecasts for the U.S. economy for 2020 and 2021 focusing on the effects of COVID-19. USAGE is a detailed dynamic model of the U.S. economy. It generates results for macro, industry and regional variables. At this stage it seems likely that the Covid downturn will be mild relative to the GFC and will not be long-lived. Over the 2 years from Y20Q1 to Y21Q4, the pandemic will cost the U.S. economy about 8 per cent of a year’s GDP. This is the loss of output measured by the difference between what the U.S. economy would have produced without the pandemic compared with what it is producing with the pandemic. Present indications are that by 2022 GDP will be back close to its no-Covid path. By comparison, over the two years from Y08Q3 to Y10Q2, the GFC cost the U.S. economy about 9.4% of a year’s GDP, and the negative effects continued for at least another two years. Through 2021, tourism-related industries and regions will remain depressed, but the rest of the economy is likely to recover. In making our forecasts for 2021, we assumed that the Biden administration will implement a stimulus package sufficient to generate 5 per cent year-on-year growth in GDP. The size of the required package depends on reactions of households and other actors in the economy. If households are willing to spend income supplements in the way in which they spend normal household income, then a relatively small package will be adequate, a little over $1 trillion. On the other hand, if households adopt a consumption propensity on stimulus payments that is half of that on normal income, then a package of over $2 trillion will be required. One interpretation of the Biden proposal for $1.9 trillion is that it is a request to have the freedom to support strong growth. If stimulus is successful and strong growth emerges, then it may not be necessary to use the entire package.

Suggested Citation

  • Dixon, Peter & Rimmer, Maureen & Giesecke, James A., 2021. "Effects of Covid on the U.S. economy: update after 4 quarters of data," Conference papers 333259, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333259
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/333259/files/10342.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dixon Peter B & Lee Bumsoo & Muehlenbeck Todd & Rimmer Maureen T. & Rose Adam & Verikios George, 2010. "Effects on the U.S. of an H1N1 Epidemic: Analysis with a Quarterly CGE Model," Journal of Homeland Security and Emergency Management, De Gruyter, vol. 7(1), pages 1-19, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frey, Miriam, 2014. "Assessing the Impact of a Carbon Tax in Ukraine," Conference papers 332556, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Roberto Roson & Camille Van der Vorst, 2021. "The COVID crumbling of tourism in Andalusia: an assessment of economic and environmental consequences," Working Papers 2021: 18, Department of Economics, University of Venice "Ca' Foscari".
    3. Deriu, S. & Cassar, I.P. & Pretaroli, R. & Socci, C., 2022. "The economic impact of Covid-19 pandemic in Sardinia," Research in Transportation Economics, Elsevier, vol. 93(C).
    4. Verikios, George & Sullivan, Maura & Stojanovski, Pane & Giesecke, James & Woo, Gordon, 2011. "The Global Economic Effects of Pandemic Influenza," Conference papers 332033, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Peter B. Dixon & Maureen T. Rimmer, 2021. "Coping with seasonality in a quarterly CGE model: COVID‐19 and U.S. agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(4), pages 802-821, October.
    6. De Bruin, Kelly & Monaghan, Eoin & Yakut, Aykut Mert, 2020. "The environmental and economic impacts of the COVID-19 crisis on the Irish economy: An application of the I3E model," Research Series, Economic and Social Research Institute (ESRI), number RS106, June.
    7. Adam Rose & Misak Avetisyan & Samrat Chatterjee, 2014. "A Framework for Analyzing the Economic Tradeoffs Between Urban Commerce and Security Against Terrorism," Risk Analysis, John Wiley & Sons, vol. 34(8), pages 1554-1579, August.
    8. Geard, Nic & Madden, John & McBryde, Emma & Moss, Rob & Tran, Nhi, 2016. "Modeling the economic impacts of epidemics in developing countries under alternative intervention strategies," Conference papers 332734, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    9. George Verikios & Maura Sullivan & Pane Stojanovski & James Giesecke & Gordon Woo, 2016. "Assessing Regional Risks From Pandemic Influenza: A Scenario Analysis," The World Economy, Wiley Blackwell, vol. 39(8), pages 1225-1255, August.
    10. Franziska Schuenemann & James Thurlow & Stefan Meyer & Richard Robertson & Joao Rodrigues, 2018. "Evaluating irrigation investments in Malawi: economy†wide impacts under uncertainty and labor constraints," Agricultural Economics, International Association of Agricultural Economists, vol. 49(2), pages 237-250, March.
    11. Yu Pang, 2022. "A theory of fiscal policy response to an epidemic," Health Economics, John Wiley & Sons, Ltd., vol. 31(9), pages 2050-2071, September.
    12. Ilan Noy & Tomáš Uher, 2022. "Economic consequences of pre-COVID-19 epidemics: a literature review," Chapters, in: Mark Skidmore (ed.), Handbook on the Economics of Disasters, chapter 7, pages 117-133, Edward Elgar Publishing.
    13. Roson, Roberto & van der Voorst, Camille, 2021. "The COVID crumbling of tourism in Andalusia: an assessment of economic and environmental consequences," Conference papers 333247, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    14. Louise Roos, 2014. "Theoretical specification of a labour-supply module, including HIV/AIDS, for South Africa," Centre of Policy Studies/IMPACT Centre Working Papers g-241, Victoria University, Centre of Policy Studies/IMPACT Centre.
    15. Klona, Maria, 2021. "The Days After COVID-19: A Meta-Analysis on the Impact of Epidemics and Pandemics on Long-Term Macro-Economic Performance," American Business Review, Pompea College of Business, University of New Haven, vol. 24(1), pages 188-224, May.
    16. Peter B. Dixon & Michael Jerie & Maureen T. Rimmer & Glyn Wittwer, 2017. "Using a regional CGE model for rapid assessments of the economic implications of terrorism events: creating GRAD-ECAT (Generalized, Regional And Dynamic Economic Consequence Analysis Tool)," Centre of Policy Studies/IMPACT Centre Working Papers g-280, Victoria University, Centre of Policy Studies/IMPACT Centre.
    17. Sungjo Hong & Seok-Hwan Choi, 2021. "The Urban Characteristics of High Economic Resilient Neighborhoods during the COVID-19 Pandemic: A Case of Suwon, South Korea," Sustainability, MDPI, vol. 13(9), pages 1-39, April.
    18. Dixon, Peter & Jerie, Michael & Rimmer, Maureen & Wittwer, Glyn, 2017. "Using a regional CGE model for rapid assessments of the economic implications of terrorism: creating GRAD-ECAT (Generalized, Regional And Dynamic Economic Consequence Analysis Tool," Conference papers 332900, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    19. Kholodilin, Konstantin A. & Rieth, Malte, 2023. "Viral shocks to the world economy," European Economic Review, Elsevier, vol. 158(C).
    20. Donohoe, Holly & Pennington-Gray, Lori & Omodior, Oghenekaro, 2015. "Lyme disease: Current issues, implications, and recommendations for tourism management," Tourism Management, Elsevier, vol. 46(C), pages 408-418.

    More about this item

    Keywords

    Health Economics and Policy;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:333259. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.