The Cost of COVID-19: A Rough Estimate of the 2020 US GDP Impact

Bottom Line:

It is estimated that the real GDP growth rate in the US will decline by $1.07 trillion or 5% for every month of the partial economic shutdown. 

Reference:

Makridis, C & Hartley, J. The Cost of COVID-19: A Rough Estimate of the 2020 US GDP Impact. Special Edition Policy Brief (2020). https://dx.doi.org/10.2139/ssrn.3570731

Date Published:

7 April 2020

Synopsis:

Estimations of economic impact on various industries were estimated by their degree of digital-labour intensity, assuming industries with increased digitization continue to be productive. The overall result of the model shows an estimated 5% of decrease of economic growth per month of the partial economic shutdown. More specifically, the model shows that counties with higher shares of digital workers will be less affected by the pandemic. Examples of highly digitized sectors include professional services, management, information, and utilities. Examples of low digitized sectors include accommodation and food services, retail, real estate, agriculture and forestry, and transportation. Unfortunately, this means that counties with an already lower median household incomes, lower shares of college-educated individuals, and greater non-tradable sectors are likely to be more adversely affected economically by the pandemic. It is the hope that alongside county-specific health information, the economic costs can inform policy makers on mitigation strategies. 

Summary by: Gil Yerushalmi