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News and uncertainty about COVID-19: Survey evidence and short-run economic impact

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  • Dietrich, Alexander M.
  • Kuester, Keith
  • Müller, Gernot J.
  • Schoenle, Raphael

Abstract

A tailor-made survey documents consumers’ perceptions of the US 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’s perceptions regarding output and inflation react rapidly. Uncertainty is pervasive. A business-cycle model calibrated to the consumers’ views provides an interpretation. The rise in household uncertainty accounts for two-thirds of the fall in output. Different perceptions about monetary policy can explain why consumers and professional forecasters agree on the recessionary impact, but have sharply divergent views about inflation.

Suggested Citation

  • Dietrich, Alexander M. & Kuester, Keith & Müller, Gernot J. & Schoenle, Raphael, 2022. "News and uncertainty about COVID-19: Survey evidence and short-run economic impact," Journal of Monetary Economics, Elsevier, vol. 129(S), pages 35-51.
    • Handle: RePEc:eee:moneco:v:129:y:2022:i:s:p:s35-s51
    DOI: 10.1016/j.jmoneco.2022.02.004
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    More about this item

    Keywords

    Consumer expectations; Survey; Large shock; Uncertainty; Monetary policy;
    All these keywords.

    JEL classification:

    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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