IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/33857.html
   My bibliography  Save this paper

Recovering from COVID

Author

Listed:
  • James H. Stock
  • Mark W. Watson

Abstract

The COVID business cycle was unique. The recession was by far the deepest and shortest in the U.S. postwar record and the recovery was remarkably rapid. The cycle saw an unprecedented reallocation of employment and consumption away from in-person services towards goods that can be consumed at home and outdoors. This paper provides a simple empirical model that attributes these and other anomalies in real economic activity to a single unobserved shock. That shock is closely connected to COVID deaths, and diminishes in importance over the expansion, consistent with self-protective measures like masking, COVID fatigue, and eventually the availability of the vaccine. The COVID shock and anomalous COVID dynamics largely disappeared by late 2022. It appears that macrodynamics have returned to normal and that the structural shifts wrought by the pandemic have had limited effects on the underlying economic trends of key indicators, despite notable changes like the prevalence of remote work. The greatest macroeconomic legacy of the COVID business cycle has been on the national debt.

Suggested Citation

  • James H. Stock & Mark W. Watson, 2025. "Recovering from COVID," NBER Working Papers 33857, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33857
    Note: EFG EH ME
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w33857.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I00 - Health, Education, and Welfare - - General - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

    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:nbr:nberwo:33857. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.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.