COVID-19 and the U.S. Economy

Changes from November 16, 2020 to May 11, 2021

This page shows textual changes in the document between the two versions indicated in the dates above. Textual matter removed in the later version is indicated with ~~red strikethrough~~ and textual matter added in the later version is indicated with blue.

COVID-19 and the U.S. Economy
~~November 16, 2020~~May 11, 2021
On June 8, 2020, the National Bureau of Economic Research (NBER) announced that the United On June 8, 2020, the National Bureau of Economic Research (NBER) announced that the United
States entered into a recession in March 2020, a result of the Coronavirus Disease 2019 (COVID-States entered into a recession in March 2020, a result of the Coronavirus Disease 2019 (COVID-
Lida R. Weinstock
19) pandemic. To prevent the spread of COVID-19, lockdown orders were issued in many parts 19) pandemic. To prevent the spread of COVID-19, lockdown orders were issued in many parts
Analyst in Macroeconomic Analyst in Macroeconomic
of the country and travel restrictions were put in place. These measures, along with general fears of the country and travel restrictions were put in place. These measures, along with general fears
Policy Policy
of the coronavirus, caused swift and large aggregate demand and supply of the coronavirus, caused swift and large aggregate demand and supply ~~shocks~~s hocks that resulted in that resulted in

the deepest economic downturn the United States has seen since the Great Depression. the deepest economic downturn the United States has seen since the Great Depression.

In the post-World War II era, the peak unemployment rate of 14.7% in April 2020 was the In the post-World War II era, the peak unemployment rate of 14.7% in April 2020 was the
highest recorded monthly rate, and the second quarter annualized decline in gross domestic product (GDP) of 31.4%, driven highest recorded monthly rate, and the second quarter annualized decline in gross domestic product (GDP) of 31.4%, driven
by decreases in personal consumption expenditures and gross private fixed investment, was the highest recorded single by decreases in personal consumption expenditures and gross private fixed investment, was the highest recorded single
quarterly decline in real GDP. The pandemic caused relatively low inflation in the aggregate, and prices for certain goods, quarterly decline in real GDP. The pandemic caused relatively low inflation in the aggregate, and prices for certain goods,
such as gasoline, decreased by double-digits. Although the economy has improved since the second quartersuch as gasoline, decreased by double-digits. Although the economy has improved since the second quarter of 2020, , including the including the
highest single quarterly increase in GDP (33.1% annualized) in the third quarter and the decline in unemployment to 6.highest single quarterly increase in GDP (33.1% annualized) in the third quarter and the decline in unemployment to 6.91% in April 2021, many~~% in~~
~~October, most~~ economic indicators show that economic activity has still not fully recovered. In some cases recovery appears economic indicators show that economic activity has still not fully recovered. In some cases recovery appears
~~to be slowing and the recession is not expected to end until the pandemic subsides~~to be slowing. When the public health crisis began, many . When the public health crisis began, many
workers were laid off on temporary furloughs, but since then, many of those temporary job losses have become permanent, workers were laid off on temporary furloughs, but since then, many of those temporary job losses have become permanent,
leading to concerns that unemployment leading to concerns that unemployment ~~will~~may remain remain ~~high~~elevated for several years. for several years.
Other indicators are harder to parse. The personal saving rate in the United States increased to a peak of 33.7% in April 2020 Other indicators are harder to parse. The personal saving rate in the United States increased to a peak of 33.7% in April 2020
and remains elevated from pre-pandemic rates. Although a higher saving rate means lower consumption, which could hamper and remains elevated from pre-pandemic rates. Although a higher saving rate means lower consumption, which could hamper
growth in the short run, it could also translate to higher investment levels, which would contribute to longgrowth in the short run, it could also translate to higher investment levels, which would contribute to long -run growth. Labor -run growth. Labor
productivity, a measure of labor efficiency, also increased in most major sectorsproductivity, a measure of labor efficiency, also increased in most major sectors in the beginning of the pandemic, which would tend to positively affect short-, which would tend to positively affect short-
run growth. run growth. ~~However, this~~This pattern is consistent with pattern is consistent with ~~productivity patterns~~changes in productivity seen during recessions since the 1980s seen during recessions since the 1980s~~, and~~
~~therefore~~. It is likely caused by employers’ ability to furlough or lay off their least efficient workers first is likely caused by employers’ ability to furlough or lay off their least efficient workers first ~~and the~~, resulting in a temporary temporary
increase in capital per remaining worker. increase in capital per remaining worker. ~~These effects are therefore likely to reverse themselves once the recession ends and~~
~~not lead to any change in long-run growth rates~~Following this initial increase, labor productivity fell in most sectors by the fourth quarter of 2020. Some longer-lasting changes could be possible for specific groups of . Some longer-lasting changes could be possible for specific groups of
individuals, such as those who work for industries that have been hardest hit by the pandemic. Questions of changing individuals, such as those who work for industries that have been hardest hit by the pandemic. Questions of changing
consumer preference and the potential for the saving rate to remain high could result in changing landscapes for many consumer preference and the potential for the saving rate to remain high could result in changing landscapes for many
businesses and for the nature of work itself. businesses and for the nature of work itself.
~~Between March 2020 and April 2020~~Over the course of the pandemic, Congress approved , Congress approved ~~four~~six major laws—the Coronavirus Preparedness and Response major laws—the Coronavirus Preparedness and Response
Supplemental Appropriations Act 2020 (P.L. 116-123)Supplemental Appropriations Act 2020 (P.L. 116-123), ; the Families First Coronavirus Response Act (P.L. 116-127)the Families First Coronavirus Response Act (P.L. 116-127), ; the the
Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136)Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136)~~, and~~; the Paycheck Protection Program and the Paycheck Protection Program and
Health Care Enhancement Act (P.L. 116-139)Health Care Enhancement Act (P.L. 116-139); the Consolidated Appropriations Act, 2021 (P.L. 116-260); and the American Rescue Plan Act of 2021 (P.L. 117-2)—to address the effects of COVID-19 and provide direct assistance to —to address the effects of COVID-19 and provide direct assistance to
households and businesses. In addition, the Federal Reserve lowered the federal funds rate (the overnight interbank lending households and businesses. In addition, the Federal Reserve lowered the federal funds rate (the overnight interbank lending
rate), increased asset purchases, revived and created new emergency credit facilities, and encouraged the use of the discount rate), increased asset purchases, revived and created new emergency credit facilities, and encouraged the use of the discount
window. These policies mitigated the decline in aggregate economic conditions in the short run. Of note, total personal window. These policies mitigated the decline in aggregate economic conditions in the short run. Of note, total personal
~~income increased in April and as of September remains at about February levels. The~~income increased and remains elevated from February 2020 levels. The three rounds of economic impact payments (sometimes economic impact payments (sometimes
referred to as stimulus checks) greatly contributed to personal income in the first few months of the pandemic. In Aprilreferred to as stimulus checks) greatly contributed to personal income in the first few months of the pandemic. In April 2020, January 2021, and March 2021, the ~~, the~~
payments made up more than 12%payments made up more than 12%, 7%, and 16% of total personal income of total personal income, respectively, and contributed to and contributed to ~~a 12.2% increase~~increases in the level of total personal in the level of total personal
income. income. ~~This~~The overall increase in personal income was very large relative to normal fluctuations in personal income, especially overall increase in personal income was very large relative to normal fluctuations in personal income, especially
~~given the unprecedented decreases in employment and GDP in the same month.~~
~~Several provisions of these laws have since expired. Without additional federal aid, some industries may continue to furlough~~
~~and permanently lay off significant portions of their workforce. Personal income could decrease, potentially dampening~~
~~personal consumption expenditures and demand across sectors and industries. However, enacting further stimulus may come~~
~~with certain drawbacks, such as increasing the already high debt-to-GDP ratio or providing only short-run gains to aggregate~~
~~growth.~~
~~Future fiscal stimulus remains uncertain. Congress has been negotiating another round of stimulus but has yet to reach~~
~~consensus on a package. The House approved two bills, H.R. 6800 and H.R. 925 on May 15 and October 1, respectively. The~~
~~Senate has yet to pass a response but has considered proposals in the form of amendments to S. 178.~~
given the unprecedented decreases in employment and GDP in the wake of COVID-19. There have been some notable debates about potential adverse effects of pandemic-related legislation, including whether the stimulus payments will cause inflation and whether they will add too much to the debt. The legislation is expected to boost GDP in the short term, and the Federal Reserve projects that, in part due to the relief and stimulus, real GDP will increase by 6.5% in 2021. However, some are worried that the economy will grow too quickly and cause overheating. Inflation has picked up in recent months but remains within target for the Federal Reserve’s goal of an average of 2%. Congressional Research Service Congressional Research Service

COVID-19 and the U.S. Economy

Introduction
On March 13, 2020, President Trump declared the Coronavirus Disease 2019 (COVID-19) On March 13, 2020, President Trump declared the Coronavirus Disease 2019 (COVID-19)
pandemic to be a national emergency.1 As COVID-19 spread across the country, businesses pandemic to be a national emergency.1 As COVID-19 spread across the country, businesses
closed, state lockdown orders were put in place, and social distancing measures were adopted in closed, state lockdown orders were put in place, and social distancing measures were adopted in
an attempt to slow the spread of the disease. Economic activity skidded to a halt, resulting in a an attempt to slow the spread of the disease. Economic activity skidded to a halt, resulting in a
rapid decrease in both employment and gross domestic product (GDP). On June 8, 2020, the rapid decrease in both employment and gross domestic product (GDP). On June 8, 2020, the
National Bureau of Economic Research (NBER) declared that economic activity had peaked in National Bureau of Economic Research (NBER) declared that economic activity had peaked in
February and a recession began in March 2020.2February and a recession began in March 2020.2
Most recessions are caused by either an aggregate demand shock (a sudden change in the amount Most recessions are caused by either an aggregate demand shock (a sudden change in the amount
of goods and services desired at a specific price point) or an aggregate supply shock (a sudden of goods and services desired at a specific price point) or an aggregate supply shock (a sudden
change in the amount of goods and services sold at a specific price point), but the pandemic change in the amount of goods and services sold at a specific price point), but the pandemic
caused problems to both aggregate demand and supply. COVID-19 caused a swift decline in caused problems to both aggregate demand and supply. COVID-19 caused a swift decline in
productive capacity and aggregate demand following the implementation of social distancing productive capacity and aggregate demand following the implementation of social distancing
measures and individual concerns about the spread of the virus.3 The unemployment rate measures and individual concerns about the spread of the virus.3 The unemployment rate
increased rapidly and consumer spending plummeted as individuals either lost income, ceased increased rapidly and consumer spending plummeted as individuals either lost income, ceased
patronizing in-person stores and restaurants, or both. As demand for certain goods and services patronizing in-person stores and restaurants, or both. As demand for certain goods and services
(such as gasoline as people began to telework at unprecedented rates) dropped, demand for others (such as gasoline as people began to telework at unprecedented rates) dropped, demand for others
rose quickly and supply chains could not meet that demand. Grocery stores experienced shortages rose quickly and supply chains could not meet that demand. Grocery stores experienced shortages
in food, toilet paper, and cleaning supplies and personal protective equipment became scarce.4 in food, toilet paper, and cleaning supplies and personal protective equipment became scarce.4
With time, some of these supply chains have corrected but problems continue to arise as the With time, some of these supply chains have corrected but problems continue to arise as the
public health crisis evolves. The combination of aggregate demand and aggregate supply public health crisis evolves. The combination of aggregate demand and aggregate supply
problems makes the economic dynamics of this recession unusual and the path of the recession problems makes the economic dynamics of this recession unusual and the path of the recession
and recovery difficult to predict. and recovery difficult to predict.
In response to the pandemic and resultant economic downturn, in March and April 2020, In response to the pandemic and resultant economic downturn, in March and April 2020,
Congress passed four laws to provide economic stimulus and assistance to the American people—Congress passed four laws to provide economic stimulus and assistance to the American people—
the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 (P.L. 116-
123)123),; the Families First Coronavirus Response Act (P.L. 116-127) the Families First Coronavirus Response Act (P.L. 116-127),; the Coronavirus Aid, Relief, the Coronavirus Aid, Relief,
and Economic Security (CARES) Act (P.L. 116-136)and Economic Security (CARES) Act (P.L. 116-136),; and the Paycheck Protection Program and and the Paycheck Protection Program and
Health Care Enhancement Act (P.L. 116-139). Health Care Enhancement Act (P.L. 116-139). ~~Many of the provisions in these laws have since~~
~~expired, and Congress and the Trump Administration have been negotiating another round of~~
~~stimulus measures. In~~Additional relief and stimulus was enacted in December 2020 and March 2021 in the Consolidated Appropriations Act, 2021 (P.L. 116-260), and the American Rescue Plan Act of 2021 (P.L. 117-2), respectively. The rollout of vaccination is underway, but in the meantime, some social distancing measures remain in place the meantime, some social distancing measures remain in place, and and
economic activity is not expected to economic activity is not expected to fully return to normal until the pandemic has return to normal until the pandemic has sufficiently subsided. subsided.
This report provides a synopsis of the economic conditions caused by the pandemic and the This report provides a synopsis of the economic conditions caused by the pandemic and the
theoretical context for how and why economic conditions deteriorated so rapidly in many cases. theoretical context for how and why economic conditions deteriorated so rapidly in many cases.
~~The report discusses the following economic indicators: employment and unemployment, GDP~~
~~and its components, saving, productivity, and inflation. The report then discusses the impacts of~~

1 President Donald J. 1 President Donald J. ~~Trump~~T rump, , Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus
Disease (COVID-19) Outbreak, , ~~The~~T he White House, March 13, 2020, at https://www.whitehouse.gov/presidential- White House, March 13, 2020, at https://www.whitehouse.gov/presidential-
actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/. actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/.
2 National Bureau2 National Bureau of Economic Research (NBER), “of Economic Research (NBER), “~~Business~~ Business Cycle Dating Committee Announcements,” at Cycle Dating Committee Announcements,” at
https://www.nber.org/cycles/main.html. https://www.nber.org/cycles/main.html.
3 Pedro Brinca, Joao B. Duarte, and Miguel 3 Pedro Brinca, Joao B. Duarte, and Miguel Faria e Castro, Faria e Castro, Is the COVID-19 Pandemic a Supply or a Demand Shock?
FederalFederal Reserve Bank of St. Louis,Reserve Bank of St. Louis, Economic Synopsis no. 31, May 20, 2020, at https://files.stlouisfed.org/research/Economic Synopsis no. 31, May 20, 2020, at https://files.stlouisfed.org/research/
publications/economic-synopses/2020/05/20/is-the-covid-19-pandemic-a-supply-or-a-demand-shock.pdf. publications/economic-synopses/2020/05/20/is-the-covid-19-pandemic-a-supply-or-a-demand-shock.pdf.
4 Ana Swanson,4 Ana Swanson, “Global “Global ~~Trade~~T rade Sputters, Leaving Sputters, Leaving ~~Too~~T oo Much Here, Much Here, ~~Too Little There~~T oo Little T here,” ,” The New York Times, April 10, , April 10,
2020, at https://www.nytimes.com/2020/04/10/business/economy/global-trade-shortages-coronavirus.html. 2020, at https://www.nytimes.com/2020/04/10/business/economy/global-trade-shortages-coronavirus.html.
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~~recent fiscal and monetary policy on the economy, most specifically on GDP and personal~~
~~income. The policy discussion also includes the expiration of certain provisions from the CARES~~
~~Act and how these expirations might affect the economy. Finally~~The report discusses the following economic indicators: employment and unemployment, GDP and its components, saving, productivity, and inflation. The report then discusses the impacts of fiscal and monetary policy on the economy, most specifical y on GDP and personal income. Final y, the report closes with a discussion about~~, the report closes with a~~
~~conversation of~~ the economic landscape moving forward the economic landscape moving forward~~, what a recovery might look like, and~~
and the potential lasting impacts to the economy from both the pandemic and the recession. potential lasting impacts to the economy from both the pandemic and the recession.
Economic Indicators
The recession caused by COVID-19 is unprecedented in many ways. By many measures, this The recession caused by COVID-19 is unprecedented in many ways. By many measures, this
recession is the deepest since the Great Depression. The peak unemployment rate of 14.7% in recession is the deepest since the Great Depression. The peak unemployment rate of 14.7% in
April April 2020 was the highest monthly rate recorded by the Bureau of Labor Statistics (BLS)5 since 1948 was the highest monthly rate recorded by the Bureau of Labor Statistics (BLS)5 since 1948
when the series started; the second quarter when the series started; the second quarter of 2020 annualized decline in gross domestic product (GDP) of annualized decline in gross domestic product (GDP) of
31.4% was the highest single quarterly decline in real GDP recorded by the 31.4% was the highest single quarterly decline in real GDP recorded by the Bureau of Economic Bureau of Economic
Analysis (BEA) since that series started in 1947.6 The rate of decline in economic activity was Analysis (BEA) since that series started in 1947.6 The rate of decline in economic activity was
also very rapid—seemingly overnight states put lockdown orders into effect, trade and travel also very rapid—seemingly overnight states put lockdown orders into effect, trade and travel
were disrupted, and commerce screeched to a halt. The economy has improved since the worst were disrupted, and commerce screeched to a halt. The economy has improved since the worst
months of the second quarter months of the second quarter of 2020 but is but is ~~still~~ stil not fully recovered. not fully recovered. This section discusses key economic This section discusses key economic
indicators and how the pandemic has affected them. indicators and how the pandemic has affected them.
Employment and Unemployment
COVID-19 and the subsequent public health crisis led to precipitous increases in unemployment COVID-19 and the subsequent public health crisis led to precipitous increases in unemployment
and underemployment since March and underemployment since March 2~~020~~2020. Figure 1 contrasts the official U3 unemployment contrasts the official U3 unemployment
rate—unemployed workers as a percentage of the labor force—with the U6 rate, which also rate—unemployed workers as a percentage of the labor force—with the U6 rate, which also
includes those working part-time for economic reasons and discouraged workers (i.e., workers includes those working part-time for economic reasons and discouraged workers (i.e., workers
who dropped out of the labor force for a labor market-related issue). The U3 rate reached a peak who dropped out of the labor force for a labor market-related issue). The U3 rate reached a peak
of 14.7% in Aprilof 14.7% in April ~~2020 before falling to 6.9% in October 2020~~ 2020 and has fal en to 6.1% as of April 2021. The U6 rate followed a similar . The U6 rate followed a similar
pattern, rising to a high of 22.8% in April 2020 and pattern, rising to a high of 22.8% in April 2020 and ~~falling~~ fal ing each subsequent month, reaching each subsequent month, reaching
~~12.1% in October 2020~~10.4% in April 2021.7 Both the U3 and U6 rates continue to be elevated as compared with pre-.7 Both the U3 and U6 rates continue to be elevated as compared with pre-
pandemic ratespandemic rates~~. The August U3 rate is 4-5 percentage points higher than the U3 rate between~~
~~January 2019 and February 2020. The August U6 rate is 6-8 percentage points higher than the U6~~
~~rate between January 2019 and February 2020~~, by 2.5 percentage points for U3 and 3.7 percentage points for U6.8 Although the U6 is the broadest measure of labor .8 Although the U6 is the broadest measure of labor
underutilization, in this case it does not capture the full effects of the pandemic on the labor force. underutilization, in this case it does not capture the full effects of the pandemic on the labor force.
While discouraged workers account for a portion of the drop in the labor force, many parents While discouraged workers account for a portion of the drop in the labor force, many parents
~~(especially~~(especial y women) have also been exiting the labor women) have also been exiting the labor force due to childcare needs, force due to childcare needs, ~~especially~~especial y given given
many schools are now virtual, or other care needs.9 many schools are now virtual, or other care needs.9

~~5 Bureau~~ 5 Bureau of Labor Statistics (BLS),of Labor Statistics (BLS), “ “Labor Force Statistics from the Current Population Survey: Access to historical Labor Force Statistics from the Current Population Survey: Access to historical
data for the “data for the “ A” tables of the Employment Situation News Release,” at https://www.bls.gov/cps/cpsatabs.htm. A” tables of the Employment Situation News Release,” at https://www.bls.gov/cps/cpsatabs.htm.
6 Bureau 6 Bureau of Economic Analysis (BEA), “of Economic Analysis (BEA), “ National Data: National Income and Product Accounts,” at National Data: National Income and Product Accounts,” at
https://apps.bea.gov/https://apps.bea.gov/~~iTable/iTable~~iT able/iT able.cfm?reqid=19&step=2#reqid=19&step=2&isuri=1&1921=survey. .cfm?reqid=19&step=2#reqid=19&step=2&isuri=1&1921=survey.
7 BLS, 7 BLS, “Employment Situation Summary—“Employment Situation Summary—~~September 2020~~April 2021,” news release, ,” news release, ~~October 2, 2020~~May 7, 2021, at https://www.bls.gov/, at https://www.bls.gov/
news.release/empsit.nr0.htm. news.release/empsit.nr0.htm.
8 For further explanation of these rates, see CRS8 For further explanation of these rates, see CRS In FocusIn Focus IF10443, IF10443, Introduction to U.S. Economy: Unemployment, by , by
Lida R.Lida R. Weinstock. Weinstock.
9 See, 9 See, ~~e.g.~~ for example, Nicole Bateman and Martha Ross, “, Nicole Bateman and Martha Ross, “ Why Has COVID-19 Been Especially Harmful for Working Women?” Why Has COVID-19 Been Especially Harmful for Working Women?”
BrookingsBrookings Institution, , 19A: The Brookings Gender Equality Series, October 2020, at https://www.brookings.edu/essay/why-has-, October 2020, at https://www.brookings.edu/essay/why-has-
covid-19-been-especially-harmful-for-working-women/; and Alisha covid-19-been-especially-harmful-for-working-women/; and Alisha ~~Haridasani~~ Haridasani Gupta, “Why Did HundredsGupta, “Why Did Hundreds of T housandsof
~~Thousands~~ of Women Drop Out of the Work Force?” of Women Drop Out of the Work Force?” The New York Times, , October 3, 2020, at https://www.nytimes.com/2020/10/03/us/jobs-women-dropping-out-workforce-wage-gap-gender.html. ~~October 3, 2020, at~~
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Analysis of changes in employed workers may offer additional, and in some situations more Analysis of changes in employed workers may offer additional, and in some situations more
stable,10 insights into the state of the labor force. The number of employed workers as a stable,10 insights into the state of the labor force. The number of employed workers as a
percentage of the noninstitutionalized population decreased percentage of the noninstitutionalized population decreased ~~substantially~~substantial y during the pandemic. during the pandemic.
The employment-population ratio hit a low of 51.3% in April 2020 as compared with rates The employment-population ratio hit a low of 51.3% in April 2020 as compared with rates
consistently above 60% in the preceding year, and it has since risen to 57.consistently above 60% in the preceding year, and it has since risen to 57.~~4% in October 2020~~9% in April 2021. In . In
terms of the number of people employed, as compared with pre-pandemic levels in February, the terms of the number of people employed, as compared with pre-pandemic levels in February, the
number of employed persons number of employed persons ~~fell~~ fel by more than 25 by more than 25 ~~million~~ mil ion in April in April 2020 but was down by roughly but was down by roughly 9
~~million by October.11~~
7.6 mil ion by April 2021.11 Figure 1. The (Un)employment Situation

Source: Bureau of Labor Statistics (BLS). Bureau of Labor Statistics (BLS).
Note: ~~Seasonally~~Seasonal y adjusted. adjusted.
Although unemployment and employment-population rates have begun to recover from April Although unemployment and employment-population rates have begun to recover from April
2020 lows, concerns lows, concerns ~~still~~ stil exist about significant permanent job loss in the economy. When the public exist about significant permanent job loss in the economy. When the public
health crisis began, many workers were laid off on temporary furloughs, but since then many of health crisis began, many workers were laid off on temporary furloughs, but since then many of
those temporary job losses have become permanent.12 Assuming jobs return those temporary job losses have become permanent.12 Assuming jobs return ~~eventually~~ eventual y after the after the
pandemic subsides, this increase in permanent layoffs would be considered an increase pandemic subsides, this increase in permanent layoffs would be considered an increase in cyclical in cyclical
unemployment—unemployment that is a result of the business cycle. However, if the pandemic unemployment—unemployment that is a result of the business cycle. However, if the pandemic
results in permanent changes to and job losses in some industries, the level of structural results in permanent changes to and job losses in some industries, the level of structural
unemployment—relatively long-lasting unemployment as a result of shifts in the economy—unemployment—relatively long-lasting unemployment as a result of shifts in the economy—
could increasecould increase.. Figure 2 ~~illustrates~~il ustrates this phenomenon. In April 2020, due to the sudden closure of this phenomenon. In April 2020, due to the sudden closure of
many businesses, the percentage of individuals unemployed for less than five weeks increased. many businesses, the percentage of individuals unemployed for less than five weeks increased.
Since the shock, the duration of unemployment has been increasing, with those unemployed for Since the shock, the duration of unemployment has been increasing, with those unemployed for
more than 14 weeks accounting for over half of more than 14 weeks accounting for over half of ~~all~~ al unemployed individualsunemployed individuals in October 2020. By in October 2020. By
~~September~~April 2021, the percentage of unemployed individuals who had been unemployed for 27 or more , the percentage of unemployed individuals who had been unemployed for 27 or more

~~https://www.nytimes.com/2020/10/03/us/jobs-women-dropping-out-workforce-wage-gap-gender.html.~~
weeks was a seasonal y adjusted 43.0%, up from 19.2% in February 2020, before the pandemic began.13 10 For explanation of why unemployment rates may not be as accurate as normal, see CRS10 For explanation of why unemployment rates may not be as accurate as normal, see CRS Insight IN11456, Insight IN11456, COVID-
19: Measuring ~~Unemployment~~Unem ploym ent, by Lida R. Weinstock. , by Lida R. Weinstock.
11 BLS, 11 BLS, “Employment Situation Summary—“Employment Situation Summary—~~September 2020,” news release, October 2, 2020, at https://www.bls.gov/~~
~~news.release/empsit.nr0.htm.~~
April 2021.” 12 For example, see Greg12 For example, see Greg Iacurci, “Unemployment Was Supposed Iacurci, “Unemployment Was Supposed ~~To Be Temporary~~T o Be T emporary. Now, It’s Permanent for Almost 4 . Now, It’s Permanent for Almost 4
Million,” Million,” CNBC,, October 13, 2020, at https://www.cnbc.com/2020/10/13/covid-related-unemployment-is-now-October 13, 2020, at https://www.cnbc.com/2020/10/13/covid-related-unemployment-is-now-
permanentpermanent -for-almost-4-million.html. 13 BLS, “Access to Historical Data for the “A” T ables of the Employment Situation News Release,” May 7, 2021, at https://www.bls.gov/cps/cpsatabs.htm. ~~-for-almost-4-million.html.~~
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~~weeks was a seasonally adjusted 32.5%, up from 19.2% in February, before the pandemic~~
~~began.13~~
Figure 2. Duration of Unemployment

Source: BLS. BLS.
Gross Domestic Product and Its Components
Real gross domestic product (GDP)—economic output adjusted for inflation—Real gross domestic product (GDP)—economic output adjusted for inflation—~~fell~~ fel at an annual at an annual
rate of 5.0% in the first quarter of 2020 and rate of 5.0% in the first quarter of 2020 and ~~fell~~ fel at an annual rate of 31.4% in the second quarter at an annual rate of 31.4% in the second quarter
of 2020, the largest quarterly decline on record.14 The decline was driven largely by decreases in of 2020, the largest quarterly decline on record.14 The decline was driven largely by decreases in
personal consumption expenditures and gross private fixed investment.15 Gross domestic personal consumption expenditures and gross private fixed investment.15 Gross domestic
income—a income—a ~~parallel~~paral el measure to GDP that measures measure to GDP that measures ~~all~~ al income derived from production, including income derived from production, including
wages, profits, and taxes—wages, profits, and taxes—~~fell~~ fel by an annualized 2.5% in the first quarter and 33.5% in the second by an annualized 2.5% in the first quarter and 33.5% in the second
quarter.16 GDP quarter.16 GDP ~~partially~~partial y recovered in the third quarter. BEA’s advance estimate17 of third quarter recovered in the third quarter. BEA’s advance estimate17 of third quarter
2020 real GDP indicates that it rose at an annual rate of 33.1%, real GDP indicates that it rose at an annual rate of 33.1%, ana historic gain, but historic gain, but ~~still a smaller~~stil a smal er--
dollar-magnitude gain than the second quarter dollar-magnitude gain than the second quarter 2020 dollar loss.18 Real GDP has recovered significantly, but as of the first quarter of 2021, it is stil 0.9% lower than in the fourth quarter of 2019, before the pandemic began ~~dollar loss.18 However, real GDP remains below~~
~~pre-pandemic levels—in the third quarter real GDP was 2.9% below its level one year previously~~
(se(see Figure 3)~~.19~~

~~13 BLS, “Access to Historical Data for the “A” Tables of the Employment Situation News Release,” October 5, 2020, at~~
~~https://www.bls.gov/cps/cpsatabs.htm.~~
~~14 BEA, “~~.19 14 BEA, “ Gross Domestic Product (Gross Domestic Product (~~Third~~T hird Estimate), Corporate Profits (Revised), and GDP by Industry, Second Quarter Estimate), Corporate Profits (Revised), and GDP by Industry, Second Quarter
2020,” September 30, 2020, at https://www.bea.gov/news/2020/gross-domestic-product2020,” September 30, 2020, at https://www.bea.gov/news/2020/gross-domestic-product -third-estimate-corporate--third-estimate-corporate-
profits-revised-and-gdp-industry-annual. profits-revised-and-gdp-industry-annual.
15 For more information on the composition of GDP in the second quarter, see CRS 15 For more information on the composition of GDP in the second quarter, see CRS Insight IN11478, Insight IN11478, Understanding
the Second-Quarter Fall in GDP, by Mark P. Keightley and Marc Labonte. , by Mark P. Keightley and Marc Labonte.
16 BEA, “ 16 BEA, “ Gross Domestic Product (Gross Domestic Product (~~Third~~T hird Estimate), Corporate Profits (Revised), and GDP by Industry, Second Quarter Estimate), Corporate Profits (Revised), and GDP by Industry, Second Quarter
2020,” September 30, 2020, at https://www.bea.gov/news/2020/gross-domestic-product2020,” September 30, 2020, at https://www.bea.gov/news/2020/gross-domestic-product -third-estimate-corporate--third-estimate-corporate-
profits-revised-and-gdp-industry-annual. profits-revised-and-gdp-industry-annual.
17 An advance estimate is based 17 An advance estimate is based on incomplete data and is subjecton incomplete data and is subject to revision. to revision.
18 It is important to note that the 33.1% gain in GDP was18 It is important to note that the 33.1% gain in GDP was not larger than the 31.4% fall in GDP in dollar terms. For not larger than the 31.4% fall in GDP in dollar terms. For
example, a 31.4% decrease in $100 wouldexample, a 31.4% decrease in $100 would result in a $31.4 loss, leaving $68.6. A subsequentresult in a $31.4 loss, leaving $68.6. A subsequent 33.1% increase in the 33.1% increase in the
remaining $68.6 wouldremaining $68.6 would result in a $22.7 increase, leaving only $91.3, a lower amount than what wasresult in a $22.7 increase, leaving only $91.3, a lower amount than what was started with. started with.
19 BEA, “Gross Domestic Product, 19 BEA, “Gross Domestic Product, ~~Third~~First Quarter Quarter ~~2020~~2021 (Advance Estimate),” (Advance Estimate),” ~~October 29, 2020~~April 29, 2021, at , at
https://www.bea.gov/sites/default/files/https://www.bea.gov/sites/default/files/~~2020-10/gdp3q20_adv.pdf.~~
2021-04/gdp1q21_adv.pdf. Congressional Research Service Congressional Research Service
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Figure 3. Real Gross Domestic Product (GDP)

Source: Bureau of Economic AnalysisBureau of Economic Analysis (BEA). (BEA).
Note: Data using bil ions Data using bil ions of chained 2012 dol ars of chained 2012 dol ars ~~seasonally~~seasonal y adjusted at annual rates. adjusted at annual rates.
The below series of figures The below series of figures ~~illustrate~~il ustrate the cumulative change in each major component of GDP— the cumulative change in each major component of GDP—
personal consumption expenditures, gross private domestic investment, net exports of goods and personal consumption expenditures, gross private domestic investment, net exports of goods and
services, and government consumption expenditures and gross investment—since the fourth services, and government consumption expenditures and gross investment—since the fourth
quarter of 2019. A sharp decline and then rebound in personal consumption expenditures largely quarter of 2019. A sharp decline and then rebound in personal consumption expenditures largely
drove both the decline and partial recovery of real GDP in 2020. drove both the decline and partial recovery of real GDP in 2020.
Figure 4 shows the breakdown of personal shows the breakdown of personal
Figure 4. Personal Consumption
consumption expenditures into expenditures consumption expenditures into expenditures
Expenditures
on goods—durable and nondurable—and on goods—durable and nondurable—and
(cumulative change from Q4 2019) (cumulative change from Q4 2019)
services. The majority of the drop in total services. The majority of the drop in total
personal consumption expenditures was due personal consumption expenditures was due
to a decline in spending on services, which to a decline in spending on services, which
decreased by a relatively decreased by a relatively ~~small~~ smal amount in the amount in the
first quarter and then by a large amount in the first quarter and then by a large amount in the
second quarter before increasing in the second quarter before increasing in the ~~third~~
~~quarter, though not by enough to reach pre-~~
~~pandemic levels~~latter half of 2020 and, most recently, in the first quarter of 2021. The large impact on services . The large impact on services
was likelywas likely a result of business closures, social a result of business closures, social
distancing, and other measures taken to limit distancing, and other measures taken to limit
the spread of COVID-19. Spending on the spread of COVID-19. Spending on
nondurable goods (goods that are “single use” nondurable goods (goods that are “single use”

or are consumed over a short period of time) or are consumed over a short period of time)
Source: CRS calculations based on Bureau of CRS calculations based on Bureau of
Economic Analysis (BEA) data. Economic Analysis (BEA) data.
has behaved more pro- has behaved more pro-~~cyclically~~cyclical y than durable than durable
~~goods (goods that can be used over a long~~
Note: Underlying data chained to 2012 dol ars and Underlying data chained to 2012 dol ars and
~~seasonally~~ goods (goods that can be used over a long seasonal y adjusted at annual rates. adjusted at annual rates.
period of time) in dollar terms during the period of time) in dollar terms during the
pandemic. This can be largely explained by pandemic. This can be largely explained by
the nature of the public health crisis, which halted spending on certain nondurable goods, such as the nature of the public health crisis, which halted spending on certain nondurable goods, such as
gasoline for a car or new clothing, to such an extent that nondurable goods as a whole gasoline for a car or new clothing, to such an extent that nondurable goods as a whole ~~fell by~~
~~more than durable goods did. Swift action by the Federal Reserve to lower interest rates and the~~
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COVID-19 and the U.S. Economy

~~economic impact payments that went to a sizable portion of the population (160 million payments~~
~~were delivered as of August 14)20 also may have~~more than durable goods did. Swift action by the Federal Reserve to lower interest rates and the economic impact payments that went to a sizable portion of the population may have also helped bolster spending on durable goods, which helped bolster spending on durable goods, which
~~are typically~~are typical y larger investments than nondurable goods, larger investments than nondurable goods, and may have involved taking out a loan and may have involved taking out a loan
or otherwise paying in or otherwise paying in ~~installments~~instal ments. .
Figure 5 shows the breakdown of gross shows the breakdown of gross
private domestic investment by nonresidential private domestic investment by nonresidential
Figure 5. Gross Private Domestic
and residential fixed investment, and the and residential fixed investment, and the
Investment
change in private inventories. Despite its change in private inventories. Despite its
(cumulative change from Q4 2019) (cumulative change from Q4 2019)
~~small~~ smal share, change in private inventories share, change in private inventories
contributed significantly to the contributed significantly to the ~~overall fall~~ overal fal in in
gross private domestic investment in the gross private domestic investment in the
second quarter but recovered to fourth quarter second quarter but recovered to fourth quarter
2019 levels in the third quarter. When 2019 levels in the third quarter. When
COVID-19 first emerged, it led to disruptions COVID-19 first emerged, it led to disruptions
in supply chains, which were only further in supply chains, which were only further
exacerbated when the pandemic reached the exacerbated when the pandemic reached the
United States. Supply chain disruptions, along United States. Supply chain disruptions, along
with a sudden decrease in demand, caused with a sudden decrease in demand, caused
many producers to slow production and run many producers to slow production and run

down inventories instead. GDP is based on down inventories instead. GDP is based on
Source: CRS calculations based on Bureau of CRS calculations based on Bureau of
new production, and therefore the large new production, and therefore the large
Economic Analysis (BEA) data. Economic Analysis (BEA) data.
decrease in inventories contributed to the decrease in inventories contributed to the
Note: Underlying data chained to 2012 dol ars and Underlying data chained to 2012 dol ars and
decline in annualized decline in annualized GDP in the second GDP in the second
~~seasonally~~seasonal y adjusted at annual rates. adjusted at annual rates.
quarter quarter of 2020 by more than three percentage by more than three percentage
points.points.2120 Inventories increased significantly in the third quarter Inventories increased significantly in the third quarter~~, however,~~ and even surpassed and even surpassed
fourth quarter fourth quarter 2019 levels, but inventories decreased again in the first quarter of 2021~~2019 levels~~. Decreases in equipment investment, most notably transportation . Decreases in equipment investment, most notably transportation
equipment, contributed to the decrease in nonresidential fixed investment and decreases in new equipment, contributed to the decrease in nonresidential fixed investment and decreases in new
single-family housing investment led the decrease in residential fixed investment in the second single-family housing investment led the decrease in residential fixed investment in the second
~~quarter.22~~quarter of 2020.21 However, demand for housing has remained strong during the pandemic However, demand for housing has remained strong during the pandemic, and starting ~~and~~ in the third in the third
quarter quarter of 2020, new single-family new single-family housing investment increasedhousing investment increased, and residential fixed investment and residential fixed investment
therefore picked up as therefore picked up as ~~well.~~
wel and remains elevated compared to fourth quarter 2019 levels.22 Neither net exports of goods and services nor government consumption expenditures and gross Neither net exports of goods and services nor government consumption expenditures and gross
investment contributed significantly to the investment contributed significantly to the ~~fall~~ fal in GDP. As shown in GDP. As shown inin Figure 6, a~~lthough~~ although both both
exports and imports did drop significantly in the first and second quarters of 2020, they did so by exports and imports did drop significantly in the first and second quarters of 2020, they did so by
a fairly proportional amount, resulting in only a a fairly proportional amount, resulting in only a ~~small~~ smal change to net exports (exports minus change to net exports (exports minus
imports). Both imports and exports picked back up imports). Both imports and exports picked back up starting in the third quarter of 2020 but, as of the first quarter of 2021, are stil below pre-pandemic levels. 20 Justin Lahart, “Bullwhip Effect Could Boost U.S. Economy,” The Wall ~~in the third quarter, but not by enough to reach~~
~~pre-pandemic levels.~~

~~20 Internal Revenue Service, “IRS Takes New Steps to Ensure People with Children Receive $500 Economic Impact~~
~~Payments,” press release, at August 14, 2020, https://www.irs.gov/newsroom/irs-takes-new-steps-to-ensure-people-~~
~~with-children-receive-500-economic-impact-payments.~~
~~21 Justin Lahart, “Bullwhip Effect Could Boost U.S. Economy,”~~ ~~The Wall~~ Street Journal, September 23, 2020, at , September 23, 2020, at
https://www.wsj.com/articles/bullwhip-effecthttps://www.wsj.com/articles/bullwhip-effect -could-boost-could-boost -u-s-economy-11600858980. -u-s-economy-11600858980.
2221 BEA, “ BEA, “ Gross Domestic Product (Gross Domestic Product (~~Third~~T hird Estimate), Corporate Profits (Revised), and GDP by Industry, Second Quarter Estimate), Corporate Profits (Revised), and GDP by Industry, Second Quarter
2020,” news release, September 30, 2020, at https://www.bea.gov/news/2020/gross-domestic-product2020,” news release, September 30, 2020, at https://www.bea.gov/news/2020/gross-domestic-product -third-estimate--third-estimate-
corporate-profits-revised-and-gdp-industry-annual.corporate-profits-revised-and-gdp-industry-annual. 22 BEA, “Gross Domestic Product, First Quarter 2021 (Advance Estimate).”
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Figure 6. Net Exports of Goods and
Figure 7. Government Consumption
Services
Expenditures and Gross Investment
(cumulative change from Q4 2019) (cumulative change from Q4 2019)
(cumulative change from Q4 2019) (cumulative change from Q4 2019)

Source: CRS calculations based on Bureau of CRS calculations based on Bureau of
Source: CRS calculations based on Bureau of CRS calculations based on Bureau of
Economic Analysis (BEA) data. Economic Analysis (BEA) data.
Economic Analysis (BEA) data. Economic Analysis (BEA) data.
Note: Underlying data chained to 2012 dol ars Underlying data chained to 2012 dol ars
Note: Underlying data chained to 2012 dol ars Underlying data chained to 2012 dol ars
and and ~~seasonally~~ seasonal y adjusted at annual rates. adjusted at annual rates.
and and ~~seasonally~~ seasonal y adjusted at annual rates. adjusted at annual rates.
As As ~~illustrated~~il ustrated i in Figure 7, government consumption expenditures and gross investment did government consumption expenditures and gross investment did
increase throughout the first half increase throughout the first half of 2020, in part owing to the stimulus measures enacted in 2020, in part owing to the stimulus measures enacted in March March
and April that increased federal consumption expenditures, but decreases in state and local and April that increased federal consumption expenditures, but decreases in state and local
expenditures somewhat offset this, resulting in a total 0.82% contribution to the change in real expenditures somewhat offset this, resulting in a total 0.82% contribution to the change in real
GDP in the second quarterGDP in the second quarter of 2020.23 Federal spending decreased from the second to third quarter.23 Federal spending decreased from the second to third quarter of 2020, in part , in part
because certain stimulus spending was completed. State and local spending because certain stimulus spending was completed. State and local spending ~~fell~~ fel further in the further in the
third quarter of 2020, in part due to decreases in revenue necessitating spending cuts third quarter of 2020, in part due to decreases in revenue necessitating spending cuts in order to in order to
~~balance budgets~~balance budgets. Both state and federal spending were up in the first quarter of 2021, due, in part, to the additional legislation. .
Saving
Consumer spending and saving are inversely related. Individuals receive a certain amount of Consumer spending and saving are inversely related. Individuals receive a certain amount of
after-tax income that they can spend or save. By definition, what is not spent is saved. For this after-tax income that they can spend or save. By definition, what is not spent is saved. For this
reason, it follows that when personal consumption expenditures decreased as the coronavirus reason, it follows that when personal consumption expenditures decreased as the coronavirus
spread, personal saving as a percentage of disposable income would increase, as evidenced by spread, personal saving as a percentage of disposable income would increase, as evidenced by
Figure 8. As shown, the personal saving rate in the United States increased rapidly to 33.7% by As shown, the personal saving rate in the United States increased rapidly to 33.7% by
April 2020, April 2020, ~~and has since fallen, although it still remains elevated from 8.3% in February, before~~
~~the pandemic hit~~fel through November 2020, and then rose in December 2020 and January 2021 and rose again in March 2021. The personal saving rate remains elevated at 27.6% in March 2021 but is stil below April 2020’s peak. Although personal saving has been on the rise since the financial crisis of 2007-. Although personal saving has been on the rise since the financial crisis of 2007-
2009,24 the personal saving rate would 2009,24 the personal saving rate would likely increase during the pandemic for increase during the pandemic for several reasons, several reasons,
including cash hoarding, the inability to spend money due to business closures, and increased including cash hoarding, the inability to spend money due to business closures, and increased
personal income from various stimulus programs, notably the personal income from various stimulus programs, notably the ~~economic impact payments of up to~~
~~$1200 for eligible adults and $500 for each qualifying child~~three rounds of economic impact payments. An NBER working paper, in which . An NBER working paper, in which
the authors used a large-scale the authors used a large-scale ~~survey of consumers, found that 33% of individuals reported~~

~~23 BEA, “~~ 23 BEA, “ National Data: National Income and Product Accounts,” at https://apps.bea.gov/National Data: National Income and Product Accounts,” at https://apps.bea.gov/~~iTable/iTable~~iT able/iT able.cfm?reqid=19&.cfm?reqid=19&
step=2&isuri=1&categories=survey. step=2&isuri=1&categories=survey.
24 E. Katarina Vermann, “Wait, Is Saving 24 E. Katarina Vermann, “Wait, Is Saving ~~Good~~ Good or Bad?or Bad? ~~The~~ T he Paradox of Paradox of ~~Thrift~~T hrift,” ,” Economic Research Federal Reserve
Bank of St. Louis, May 2012, at https://research.stlouisfed.org/publications/page1-econ/2012/05/01/wait-is-saving-, May 2012, at https://research.stlouisfed.org/publications/page1-econ/2012/05/01/wait-is-saving-
good-or-bad-the-paradox-of-thrift/. good-or-bad-the-paradox-of-thrift/.
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~~mostly saving the payment~~survey of consumers, found that 33% of individuals reported mostly saving the first round payment, and 52% used it to pay down debt, which would qualify as saving in and 52% used it to pay down debt, which would qualify as saving in
the context of this the context of this report.25 The Federal Reserve Bank of New York Survey of Consumer Expectations found that respondents saved or expected to save 36.4% of the first round of stimulus, 37.1% of the second round of stimulus, and 41.6% of the third round of stimulus.26 According to the Census Household Pulse Survey for the period of March 17-29, 2021, for households that had received a stimulus payment in the past seven days, roughly 32% reported mostly saving it.27 ~~report.25~~
The inability The inability to spend money due to business closures may be the primary reason for the spike in to spend money due to business closures may be the primary reason for the spike in
the personal saving rate. Notably, most of the increase in saving appears to be due to high-income the personal saving rate. Notably, most of the increase in saving appears to be due to high-income
households. According to an economic tracker based on private-sector data created by economists households. According to an economic tracker based on private-sector data created by economists
to record the effects of COVID-19 in real-time, as of June 10, high-income households reduced to record the effects of COVID-19 in real-time, as of June 10, high-income households reduced
spending by 17% as compared with low-income households by only 4%.spending by 17% as compared with low-income households by only 4%.2628
Figure 8 ~~illustrates~~il ustrates quarterly net private saving, broken down by domestic businesses and quarterly net private saving, broken down by domestic businesses and
households and institutions. Net private savinghouseholds and institutions. Net private saving ~~increased during the pandemic, driven by~~
~~household saving~~, driven by household saving, increased and fel during 2020 but stil remained higher than 2019 levels by the fourth quarter of 2020. Levels of business saving decreased over the same period. Levels of business saving decreased over the same period and, despite recovering somewhat in the third quarter of 2020, remain depressed as of the first quarter of 2021, reflecting the cash-, reflecting the cash-
flow problems that flow problems that ~~still~~ stil plague many industries as the coronavirus forces closures and reduces plague many industries as the coronavirus forces closures and reduces
activities, most notably in the retail and travel sectors.activities, most notably in the retail and travel sectors.27
29 Figure 8. Saving

Source: BEA. BEA.
Note: Data Data ~~seasonally~~ seasonal y adjusted. adjusted.
Productivity
Productivity measures the efficiency of production and is, therefore, an important indicator of Productivity measures the efficiency of production and is, therefore, an important indicator of
how how ~~well~~ wel the economy is running. There are two kinds of production inputs—labor and capital. 25 Olivier Coibion, Yuriy Gorodnichenko, and Michael Weber, How Did U.S. Consumers Use Their Stimulus Paym ents? NBER, Working Paper no. 27693, August 2020, pp. 2-3. 26 Olivier Armantier et al., “An Update of How Households Are Using Stimulus Checks,” Liberty Street Economics, April 7, 2021, at https://libertystreeteconomics.newyorkfed.org/2021/04/an-update-on-how-households-are-using-stimulus-checks.html. 27 U.S. Census Bureau, Week 27 Household Pulse Survey: March 17-March 29, April 7, 2021, at https://www.census.gov/data/tables/2021/demo/hhp/hhp27.html. 28 Raj Chetty et al., How Did COVID-19 and Stabilization Policies Affect Spending and Employment? A New Real-Tim e Econom ic Tracker Based on Private Sector Data , NBER, Working Paper no. 27431, June 2020, p. 2. 29 BEA, “ National Income and Product Accounts,” at https://apps.bea.gov/iT able/index_nipa.cfm. Congressional Research Service 8 link to page 13 COVID-19 and the U.S. Economy Productivity is typical y~~the economy is running. There are two kinds of production inputs—labor and capital.~~
~~Productivity is typically~~ measured by labor productivity or total factor productivity (sometimes measured by labor productivity or total factor productivity (sometimes
referred to as multifactor productivity, which is the productivity of referred to as multifactor productivity, which is the productivity of ~~all~~ al inputs combined). This inputs combined). This
discussion focuses on the discussion focuses on the ~~former~~former. Figure 9 shows labor productivity in shows labor productivity in ~~four~~three major sectors before major sectors before
and during the COVID-19 pandemic. Labor productivity, measured in output per hour, increased and during the COVID-19 pandemic. Labor productivity, measured in output per hour, increased
in the business and nonfarm business sectors during the second quarter of 2020. Manufacturing in the business and nonfarm business sectors during the second quarter of 2020. Manufacturing
labor productivity decreased, likely a result of supply chain problems as described in previous labor productivity decreased, likely a result of supply chain problems as described in previous
sections. Labor productivity increased across sections. Labor productivity increased across ~~all~~ al three sectors in the third quarter, although the three sectors in the third quarter, although the
increase was increase was ~~smaller~~smal er than the second quarter increase for the business and nonfarm business than the second quarter increase for the business and nonfarm business
sectors. sectors.

~~25 Olivier Coibion, Yuriy Gorodnichenko, and Michael Weber,~~ ~~How Did U.S. Consumers Use Their Stimulus~~
~~Payments?~~ ~~NBER, Working Paper no. 27693, August 2020, pp. 2-3.~~
~~26 Raj Chetty et al.,~~ ~~How Did COVID-19 and Stabilization Policies Affect Spending and Employment? A New Real-~~
~~Time Economic Tracker Based on Private Sector Data, NBER, Working Paper no. 27431, June 2020, p. 2.~~
~~27 BEA, “National Income and Product Accounts,” at https://apps.bea.gov/iTable/index_nipa.cfm.~~
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~~COVID-19 and the U.S. Economy~~
Business and nonfarm business productivity decreased in the fourth quarter. Manufacturing productivity stil increased but by a lesser degree than in the third quarter.
That productivity would increase at That productivity would increase at ~~all~~ al during a recession may seem counterintuitive, but labor during a recession may seem counterintuitive, but labor
productivity has displayed countercyclical behavior for several decades. The mechanical productivity has displayed countercyclical behavior for several decades. The mechanical
explanation for this is that, during recessions, output drops but hours worked drops by a greater explanation for this is that, during recessions, output drops but hours worked drops by a greater
amount, resulting in an amount, resulting in an ~~overall~~ overal increase in output per hour. This increase in output per hour. This ~~can be observed in the current~~
is observable in the data; in the data; in the third quarter third quarter of 2020 output remained 4.0% lower that it was in the fourth quarter of 2019 but output remained 4.0% lower that it was in the fourth quarter of 2019 but
hours worked was an even greater 7.5% below the fourth quarter of 2019 level.hours worked was an even greater 7.5% below the fourth quarter of 2019 level.2830 More More ~~generally~~general y, ,
in a downturn, management can lay off low-in a downturn, management can lay off low-~~skilled~~skil ed or low-performing workers without reducing or low-performing workers without reducing
output by a large margin. During a recession, as unemployment rises, capital per worker output by a large margin. During a recession, as unemployment rises, capital per worker
increases, a concept known as capital deepening, and this, in turn, causes a short-term boost in increases, a concept known as capital deepening, and this, in turn, causes a short-term boost in
worker productivity.31 The boost in productivity appears to have been temporary, as might be expected given the theory of capital deepening. In the fourth quarter of 2020 both business and nonfarm business productivity fel . Al three sectors showed increased productivity in the first quarter of 2021, a result of increases in both output and hour worked, with output increasing by a larger magnitude.32 This report discusses the possibility of a more structural change to productivity in a later section. 30 BLS, “Productivity and Costs, T hird~~worker productivity.29 As of yet, there is not enough data to conclude that productivity is~~
~~increasing for reasons other than those mentioned or that the increase will be permanent. This~~
~~report discusses the possibility of a more structural change to productivity in a later section.~~
~~Figure 9. Major Sector Labor Productivity~~

Source: BLS.
~~Inflation~~
~~There are a few comparable sources for measuring consumer price inflation in the United~~
~~States—the personal consumption expenditure (PCE) index, the GDP deflator, and the consumer~~
~~price index (CPI). All of these indices measure how prices change over time across a series of~~
~~goods and services. Food and energy prices are typically more volatile than other types of goods~~
~~and services, and as they often make up a large proportion of total spending, in some~~
~~circumstances fluctuations in food or energy prices can affect overall inflation in a way that is not~~
~~indicative of how other goods and services prices are behaving. For this reason, economists~~
~~calculate a version of inflation that does not include food or energy, known as core inflation.30~~

~~28 BLS, “Productivity and Costs, Third~~ Quarter 2020, Preliminary,” news release, November 5, 2020, at Quarter 2020, Preliminary,” news release, November 5, 2020, at
https://www.bls.gov/news.release/prod2.nr0.htm. https://www.bls.gov/news.release/prod2.nr0.htm.
2931 See See Robert J. Gordon, “Robert J. Gordon, “~~The~~T he Evolution of Okun’s Law and of Cyclical Productivity Fluctuations,” EES/IAB Evolution of Okun’s Law and of Cyclical Productivity Fluctuations,” EES/IAB
Workshop, Labor Market Institutions and the Macreconomy, June 17Workshop, Labor Market Institutions and the Macreconomy, June 17 -18, 2011, pp. 29-34 at -18, 2011, pp. 29-34 at
http://economics.weinberg.northwestern.edu/roberthttp://economics.weinberg.northwestern.edu/robert -gordon/files/RescPapers/EvolutionOkunsLaw.pdf; and John G. -gordon/files/RescPapers/EvolutionOkunsLaw.pdf; and John G.
Fernald and J. Christina Wang, Fernald and J. Christina Wang, Why Has the Cyclicality of Productivity Changed? What Does It Mean? Federal Federal
Reserve Bank of San Francisco, Working Paper no. 2016-7, April 2016, p. 5, at https://www.frbsf.org/economic-Reserve Bank of San Francisco, Working Paper no. 2016-7, April 2016, p. 5, at https://www.frbsf.org/economic-
research/files/wp2016-07.pdf. research/files/wp2016-07.pdf.
30 For more information about inflation, see CRS In Focus IF10477, Introduction to U.S. Economy: Inflation~~, by Marc~~32 BLS, “Productivity and Costs, First Quarter 2021, Preliminary,” news release, May 6, 2021, at https://www.bls.gov/news.release/prod2.nr0.htm.
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14 link to page 15 COVID-19 and the U.S. Economy Figure 9. Major Sector Labor Productivity Source: BLS. Inflation There are a few comparable sources for measuring consumer price inflation in the United States—the personal consumption expenditure (PCE) index, the GDP deflator, and the consumer price index (CPI). Al of these indices measure how prices change over time across a series of goods and services. Food and energy prices are typical y more volatile than other types of goods and services, and as they often make up a large proportion of total spending, in some circumstances fluctuations in food or energy prices can affect overal inflation in a way that is not indicative of how other goods and services prices are behaving. For this reason, economists calculate a version of inflation that does not include food or energy, known as core inflation.33 Measures of inflation that do include food and energy prices in calculations are often referred to Measures of inflation that do include food and energy prices in calculations are often referred to
as measures of as measures of headline inflation. inflation.
Figure 10 shows the percentage change from a year ago in CPI headline and core inflation for shows the percentage change from a year ago in CPI headline and core inflation for
each month in 2020each month in 2020 through March 2021. PCE and GDP deflator methodologies differ slightly from the CPI . PCE and GDP deflator methodologies differ slightly from the CPI
methodology but show largely similar patterns. As methodology but show largely similar patterns. As ~~illustrated~~il ustrated below, core inflation was more below, core inflation was more
stable than headline inflation, in part due to the large decreases in fuel prices (stable than headline inflation, in part due to the large decreases in fuel prices (see see Figure 11)..31
34 The Federal Reserve has targeted an inflation rate of 2% in the past, although with its recent The Federal Reserve has targeted an inflation rate of 2% in the past, although with its recent
change to its monetary policy strategy, it change to its monetary policy strategy, it ~~will~~ wil be targeting an average rate of 2% moving be targeting an average rate of 2% moving
forward.forward.3235 Given 2% as a guide, inflation during the pandemic would be considered low Given 2% as a guide, inflation during the pandemic would be considered low.
, although headline CPI inflation did surpass 2% in March 2021. 33 For more information about inflation, see CRS In Focus IF10477, Introduction to U.S. Economy: Inflation, by Lida R. Weinstock. 34 BLS, “Consumer Price Index (CPI) Databases,” at https://www.bls.gov/cpi/data.htm. 35 For more information about the Federal Reserve’s Monetary Policy Strategy Statement and the recent changes to it, see CRS Insight IN11499, The Federal Reserve’s Revised Monetary Policy Strategy Statem ent, by Marc Labonte. Congressional Research Service 10 link to page 15 link to page 15 link to page 4 COVID-19 and the U.S. Economy Figure 10. Consumer Price Index (CPI) Inflation

Source: BLS. BLS.
In the aggregate, inflation has been low throughout the pandemic, but the price level of individual In the aggregate, inflation has been low throughout the pandemic, but the price level of individual
goods has varied greatly. Because of the nature of the public health crisis, demand for certain goods has varied greatly. Because of the nature of the public health crisis, demand for certain
goods has increased significantly and demand for other goods has decreased significantlygoods has increased significantly and demand for other goods has decreased significantly. Figure
11 shows the magnitude of some of these changes on a few selected consumer goods. Patterns of shows the magnitude of some of these changes on a few selected consumer goods. Patterns of
the spread of COVID-19 and social distancing measures have limited the extent to which people the spread of COVID-19 and social distancing measures have limited the extent to which people
have been able to eat in restaurants and thus demand for food at home, a category that includes have been able to eat in restaurants and thus demand for food at home, a category that includes
groceries, has increased. As discussed in the groceries, has increased. As discussed in the “Introduction,”,” some supply chains could not meet some supply chains could not meet
demand, as was the case for certain food products. Food at-home prices have been consistently demand, as was the case for certain food products. Food at-home prices have been consistently
around around 3-5% higher than they were in the same month of the previous year. Apparel saw an 5% higher than they were in the same month of the previous year. Apparel saw an
opposite trend. Given fears of the virus and any potential consumer preference changes given the opposite trend. Given fears of the virus and any potential consumer preference changes given the
state of the economy, increased telework, or other employment changes, demand for apparel state of the economy, increased telework, or other employment changes, demand for apparel
(clothing) (clothing) ~~fell~~fel , and with it apparel prices. A dramatic example of deflation , and with it apparel prices. A dramatic example of deflation (and inflation) comes with motor fuel comes with motor fuel
(gasoline) prices. A sudden decrease in travel and commuting caused demand for fuel to drop and (gasoline) prices. A sudden decrease in travel and commuting caused demand for fuel to drop and
~~prices fell drastically~~prices fel drastical y, over 33% lower in May 2020 than in May 2019.36 Since then, fuel prices have general y risen and were 22.2% higher in March 2021 than in March 2020. 36 BLS, “Consumer Price Index (CPI) Databases,” ~~, over 33% lower in May 2020 than in May 2019.33~~

~~Labonte.~~
~~31 BLS, “Consumer Price Index (CPI) Databases,” at https://www.bls.gov/cpi/data.htm.~~
~~32 For more information about the Federal Reserve’s Monetary Policy Strategy Statement and the recent changes to it,~~
~~see CRS Insight IN11499, The Federal Reserve’s Revised Monetary Policy Strategy Statement, by Marc Labonte.~~
~~33 BLS, “Consumer Price Index (CPI) Databases,”~~ at https://www.bls.gov/cpi/data.htm. at https://www.bls.gov/cpi/data.htm.
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Figure 11. Price Changes of Selected Consumer Goods

Source: BLS. BLS.
Policy Impact on the Economy
In response to the COVID-19 pandemic, the federal government implemented a wide range of In response to the COVID-19 pandemic, the federal government implemented a wide range of
stimulus and liquiditystimulus and liquidity measures. Congress passed, and the President signed, four major laws measures. Congress passed, and the President signed, four major laws
between March and April 2020between March and April 2020, another in December 2020, and a sixth in March 2021 to address ~~to address~~ the effects of COVID-19 and provide direct assistance the effects of COVID-19 and provide direct assistance
to households and businesses: to households and businesses:
 Coronavirus Preparedness and Response Supplemental Appropriations Act  Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 2020
(P.L. 116-123) (P.L. 116-123),
;  Families First Coronavirus Response Act (P.L. 116-127)  Families First Coronavirus Response Act (P.L. 116-127),
;  Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136),
~~and~~
;  Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-139) Paycheck Protection Program and Health Care Enhancement Act (P.L. 116-139).
;  Consolidated Appropriations Act, 2021 (P.L. 116-260); and  American Rescue Plan Act of 2021 (P.L. 117-2). The Federal Reserve’s response included lowering the federal funds rate (the overnight interbank The Federal Reserve’s response included lowering the federal funds rate (the overnight interbank
lending rate), purchasing assets, reviving and creating new emergency credit facilities, and lending rate), purchasing assets, reviving and creating new emergency credit facilities, and
encouraging use of the discount window.encouraging use of the discount window.34
37 This section discusses the impacts of these policiesThis section discusses the impacts of these policies~~, the expiration of certain provisions, and~~
~~potential future policies on the domestic economy.~~
. Enacted Policy
Fiscal Policy Impact
The size and speed of the initial The size and speed of the initial policy response to COVID-19 was historic in both nature and policy response to COVID-19 was historic in both nature and
proportion. While much uncertainty proportion. While much uncertainty ~~still~~ stil exists, it is clear that the policies enacted exists, it is clear that the policies enacted ~~this year have~~
~~had a positive effect on the economy. The Congressional Budget Office (CBO) published a report~~

34over the course 37 For more information on the Federal Reserve’s response to the COVID-19 pandemic, see CRS For more information on the Federal Reserve’s response to the COVID-19 pandemic, see CRS Report R46411, Report R46411, The
Federal Reserve’s Response to COVID-19: Policy Issues, by Marc Labonte. , by Marc Labonte.
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COVID-19 and the U.S. Economy

of the pandemic have had some positive effects on the economy. The Congressional Budget Office (CBO) published a report on the potential short- and long-term effects of legislation enacted in March and April 2020 on the on the potential short- and long-term effects of legislation enacted in March and April 2020 on the
domestic economy.domestic economy.3538 In the short term, CBO In the short term, CBO ~~projects~~ projected the policies enacted the policies enacted ~~will~~would increase real GDP increase real GDP
by 4.7% and 3.1% in 2020 and 2021, respectively. In the longer term, CBO expects the policies to by 4.7% and 3.1% in 2020 and 2021, respectively. In the longer term, CBO expects the policies to
increase the debt-to-GDP ratio, resulting in higher borrowing costs, dampened GDP, and increase the debt-to-GDP ratio, resulting in higher borrowing costs, dampened GDP, and ~~smaller~~
smal er national income, assuming no austerity measures national income, assuming no austerity measures are taken.are taken.3639 By 2023, CBO By 2023, CBO ~~projects~~projected that GDP would GDP would
be slightly be slightly ~~smaller~~smal er than if fiscal stimulus had not been implemented. CBO calculates that the than if fiscal stimulus had not been implemented. CBO calculates that the
policies policies ~~will~~ wil increase GDP by 58 cents for every dollar they add to the deficit between 2020 and increase GDP by 58 cents for every dollar they add to the deficit between 2020 and
2023.2023.3740 Figure 12 ~~illustrates~~il ustrates the quarterly impact of pandemic-related legislation on real GDP the quarterly impact of pandemic-related legislation on real GDP
through 2021, as projected by CBO. The largest impact occurs in the third quarter of this year and through 2021, as projected by CBO. The largest impact occurs in the third quarter of this year and
decreases in each subsequent quarter but decreases in each subsequent quarter but remains positive through 2021.remains positive through 2021.38
41 Figure 12. Estimated Effects of Pandemic-Related Legislation on
Gross Domestic Product

Source: CongressionalCongressional Budget Office (CBO). Budget Office (CBO).
Note: GDP not annualized. GDP not annualized.
Figure 13 displays the effects of certain pandemic-related enacted provisions on personal income
~~as determined by BEA. The effects are measured as a percentage of total monthly personal~~
~~income.39 The economic impact payments had the largest single-month impact on personal~~

~~35 CBO,~~ ~~The Effects~~ The Consolidated Appropriations Act, 2021, and American Rescue Plan Act of 2021 are also expected to boost GDP in the short term. When additional y accounting for this legislation, the Federal Reserve projects that real GDP wil increase by 6.5% in 2021.42 38 CBO, The Effects of Pandemic-Related Legislation on Output, September 2020, at https://www.cbo.gov/system/files/, September 2020, at https://www.cbo.gov/system/files/
2020-09/56537-pandemic-legislation.pdf. 2020-09/56537-pandemic-legislation.pdf.
3639 Austerity measures (actions taken to reduce the budget Austerity measures (actions taken to reduce the budget deficit, often through decreased deficit, often through decreased ~~government~~gov ernment expenditures) expenditures)
couldcould result in lowerresult in lower levels of debt, and therefore lower borrowing costs, higher GDP, and larger national income in the levels of debt, and therefore lower borrowing costs, higher GDP, and larger national income in the
long-run, although in the shortlong-run, although in the short -term could cause further harm to GDP and related measures. -term could cause further harm to GDP and related measures.
3740 CBO, CBO, The Effects of Pandemic-Related Legislation on Output, September 2020, September 2020~~, at https://www.cbo.gov/system/files/~~
~~2020-09/56537-pandemic-legislation.pdf.~~
38. 41 Others have done analyses on the effects of specific legislation on the U.S. Others have done analyses on the effects of specific legislation on the U.S. economy in the shorteconomy in the short - and long-term. For - and long-term. For
example, a study from the Wharton School of the University of Pennsylvania found that the CARES Act would example, a study from the Wharton School of the University of Pennsylvania found that the CARES Act would
“produce around 1.5 million additional jobs“produce around 1.5 million additional jobs by 2020 Q3 and increase GDPby 2020 Q3 and increase GDP by $812 billion over the next two years.” by $812 billion over the next two years.”
For more detailedFor more detailed information on this analysis, see Alexander Arnon, Zheli He, and Jon Huntley, “Shortinformation on this analysis, see Alexander Arnon, Zheli He, and Jon Huntley, “Short -Run Economic -Run Economic
Effects of the CARESEffects of the CARES Act,” University of Pennsylvania,Act,” University of Pennsylvania, Penn Wharton Budget Model, April 8, 2020, at , April 8, 2020, at
https://budgetmodel.wharton.upenn.edu/issues/2020/4/8/shorthttps://budgetmodel.wharton.upenn.edu/issues/2020/4/8/short -run-effects-of-the-cares-act. 42 Board of Governors of the Federal Reserve System, Summary of Economic Projections, March 17, 2021, p. 2, at Congressional Research Service 13 link to page 18 link to page 18 ~~-run-effects-of-the-cares-act.~~
~~39 For example, if total personal income in a given month was $100 and a specific program contributed $10 to total~~
~~personal income in that month, that program would constitute 10% of total personal income.~~
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~~COVID-19 and the U.S. Economy~~

~~income of the programs analyzed. In April~~COVID-19 and the U.S. Economy Figure 13 displays the effects of certain pandemic-related enacted provisions on personal income as determined by BEA. The effects are measured as a percentage of total monthly personal income.43 The economic impact payments had the largest single-month impact on personal income of the programs analyzed. In April 2020, the payments constituted more than 12% of total , the payments constituted more than 12% of total
personal income and were largely responsible for the 12.2% increase in total personal income in personal income and were largely responsible for the 12.2% increase in total personal income in
the same month. This the same month. This ~~overall~~ overal increase in personal income was significant, increase in personal income was significant, ~~especially~~especial y given the given the
unprecedented decreases in employment and GDP in the same month. Personal income in unprecedented decreases in employment and GDP in the same month. Personal income in
~~September is still higher than it was in February, before the pandemic began, but lower than in~~
~~April~~March 2021 remained higher than pre-pandemic levels. This increase and maintenance of levels of personal income, in large part due to . This increase and maintenance of levels of personal income, in large part due to ~~the~~
~~CARES Act~~pandemic-related legislation, could be responsible for some of the unusual phenomena happening during this , could be responsible for some of the unusual phenomena happening during this
recession, such as the maintenance of housing recession, such as the maintenance of housing demand and the demand and the ~~smaller~~smal er than usual drop in durable than usual drop in durable
goods spending. goods spending.
Most of the Most of the first round of one-time payments were made in April one-time payments were made in April 2020, and therefore the effects on personal income and therefore the effects on personal income
dropped off very quickly—total personal income dropped off very quickly—total personal income ~~fell~~ fel 4.2% and 1.2% in May and June4.2% and 1.2% in May and June 2020, ,
respectively. The enhanced unemployment benefits each month also contributed respectively. The enhanced unemployment benefits each month also contributed significantly to significantly to
personal income—over 5% in May, June, and Julypersonal income—over 5% in May, June, and July 2020, at which point the provision for the additional, at which point the provision for the additional
$600 per week expired, likely contributing to a 2.7% drop in total personal income in August$600 per week expired, likely contributing to a 2.7% drop in total personal income in August~~.40~~
2020.44 Of note, this 5% represents the effect on total personal income; for those unemployed individuals Of note, this 5% represents the effect on total personal income; for those unemployed individuals
~~actually~~actual y receiving the benefits, this percentage receiving the benefits, this percentage ~~will~~ wil be much higher because their incomes would be much higher because their incomes would
be lower than average. Other programs such as the be lower than average. Other programs such as the Paycheck Protection Program contributed Paycheck Protection Program contributed
relatively less to total personal income but would also have much larger effects for those relatively less to total personal income but would also have much larger effects for those
individuals directly receiving the benefits. individuals directly receiving the benefits.
~~Figure 13. Effects of Selected Policies on Personal Income~~

Source: CRS calculations using BEA data.

~~40 BEA, “~~Despite the amount being lowered, enhanced unemployment benefits have stil contributed significantly to personal income since July 2020, general y between 1% and 2%. As can be seen in Figure 13, the second and third round of economic impact payments also constituted a large share of personal income in January 2021 (7.7%) and March 2021 (16.7%). As with the first round payment, the bulk of payments were delivered in one month, and therefore it is possible that personal income wil fal after March 2021. https://www.federalreserve.gov/moneteraypolicy/file/fomcprojtabl20210317.pdf. 43 For example, if total personal income in a given month was $100 and a specific program contributed $10 to total personal income in that month, that program would constitute 10% of to tal personal income. 44 BEA, “ Effects of Selected Federal Pandemic Response Programs on Personal Income, September 2020,” table, Effects of Selected Federal Pandemic Response Programs on Personal Income, September 2020,” table,
October 30, 2020, at https://www.bea.gov/sites/default/files/2020-10/effects-of-selected-federal-pandemic-response-October 30, 2020, at https://www.bea.gov/sites/default/files/2020-10/effects-of-selected-federal-pandemic-response-
programs-on-personal-income-september-2020.pdf; and BEA, “programs-on-personal-income-september-2020.pdf; and BEA, “ Personal Income and Outlays,” newsPersonal Income and Outlays,” news release, August release, August
2020, October 1, 2020, at https://www.bea.gov/news/2020/personal-income-and-outlays-august2020, October 1, 2020, at https://www.bea.gov/news/2020/personal-income-and-outlays-august -2020. -2020.
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Figure 13. Effects of Selected Policies on Personal Income Source: CRS calculations using BEA data. Notes: Underlying data seasonal y~~Notes:~~ ~~Underlying data seasonally~~ adjusted at annual rates. Data subject to revision. adjusted at annual rates. Data subject to revision. NPISH stands for nonprofit NPISH stands for nonprofit
institutions serving households. institutions serving households.
Monetary Policy Impact
The CBO report cited above includes a brief analysis of the impact of the Federal Reserve’s The CBO report cited above includes a brief analysis of the impact of the Federal Reserve’s
emergency lending facilities on GDP.emergency lending facilities on GDP.4145 CBO estimates the lending facilities CBO estimates the lending facilities ~~will~~ wil increase real increase real
GDP by 0.1% and 0.3% in 2020 and 2021, respectively. The budgetary costs to the Federal GDP by 0.1% and 0.3% in 2020 and 2021, respectively. The budgetary costs to the Federal
Reserve are expected to be offset by interest income generated by the programs. More Reserve are expected to be offset by interest income generated by the programs. More ~~generally~~general y, ,
CBO determined that the lendingCBO determined that the lending facilities should increase confidence and provide a more stable facilities should increase confidence and provide a more stable
and favorable lending environment, thereby increasing “and favorable lending environment, thereby increasing “~~overall~~ overal demand by supporting demand by supporting
businesses’ and consumers’ spending, helping increase businesses’ chance of survival, and businesses’ and consumers’ spending, helping increase businesses’ chance of survival, and
preserving production capacity, preserving production capacity, ~~all~~ al of which of which ~~will~~ wil help expedite a recovery.”46 The emergency lending facilities backed by CARES Act funds expired at the end of 2020, and the Consolidated Appropriations Act, 2021, prohibited the Fed from reopening CARES Act programs for corporate bonds, municipal debt, and the Main Street Lending Program.47 Debates About Stimulus The economic downturn caused by COVID-19 is unusual in that many aspects of dampened demand have been caused by the nature of the public health crisis as opposed to a problem with 45 CBO, The Effects of Pandemic-Related Legislation on Output, September 2020. 46 CBO, The Effects of Pandemic-Related Legislation on Output, September 2020. 47 For more information about the Federal Reserve’s policy response to the pandemic and the expiration of some of these programs, see CRS Report R46411, The Federal Reserve’s Response to COVID-19: Policy Issues, by Marc Labonte. Congressional Research Service 15 COVID-19 and the U.S. Economy economic or financial fundamentals. As such, it is possible that aggregate demand wil rebound quickly once the health crisis comes to an end. In this way, the current situation may differ from past recessions, and the need for stimulus may diminish quickly. However, the longer the pandemic persists, the more likely there are to be lasting impacts that could affect aggregate demand and supply even once the crisis has passed. Given the uneven nature of the impacts of COVID-19, it might further be expected that the recovery wil be uneven, which could also result in the need for additional targeted stimulus. No consensus exists in economic or policy communities regarding how long or how much stimulus is appropriate as it relates to recessions general y or COVID-19 specifical y. One might look to past fiscal stimulus to help answer these sorts of queries, but economists continue to debate the efficacy and timing of past stimulus. For example, there is debate within the economic community about the effectiveness of the fiscal response to the 2007-2009 recession, with one of the concerns being that stimulus was removed too soon.48 As it relates to COVID-19, many economists are concerned about the growing debt and historical y large debt-to-GDP ratio. However, many also believe that stimulus should not be withdrawn until the crisis is over and the economy is fully recovered.49 Others believe that stimulus should be eased and deficit-reduction measures put in place sooner rather than later.50 Stil others argue that stimulus should have already been removed and that short-term gains based on deficit spending wil hurt longer-term growth and stability as future generations are forced to pay for the economic decisions of today.51 One of the largest concerns raised about pandemic-related legislation is inflation. The Fed projects that inflation wil rise modestly to 2.4% in 2021 but decrease to 2% in the longer run.52 However, some economists believe that after past legislation, the funding provided in the American Rescue Plan Act of 2021 is too large and wil result in an overheating economy and a larger temporary or sustained increase in inflation.53 Inflation did rise above 2% in March 2021, but at this point, it is not clear that higher inflation wil be sustained.54 48 Gerald A. Carlino, Did the Fiscal Stimulus Work?, Federal Reserve Bank of Philadelphia, Economic Insights, vol. 2, no. 1 (First Quarter 2018), pp. 6-16. 49 For example, see Committee for a Responsible Federal Budget, “Policymakers Should Avoid Austerity in Addressing the Debt,” November 25, 2020, at http://www.crfb.org/blogs/policymakers-should-avoid-austerity-addressing-debt; and Richard Kogan and Paul N. Van De Water, Rising Federal Debt Should Not Shortchange Response to COVID-19 Crisis, Center on Budget and Policy Priorities, September 9, 2020, at https://www.cbpp.org/research/federal-budget/rising-federal-debt-should-not-shortchange-response-to-covid-19-crisis. 50 For example, see Sita Slavov and Alan Viard, “Sound the Alarm on the Federal Debt,” The Hill, November 23, 2020, at https://thehill.com/opinion/finance/527146-sound-the-alarm-on-the-federal-debt?rl=1. 51 Veronique de Rugy, As Bastiat Would Say, Peer Past the Obvious with Pandemic Policies, Mercatus Center, July 2, 2020, at https://www.mercatus.org/commentary/bastiat-would-say-peer-past-obvious-pandemic-policies. 52 Board of Governors of the Federal Reserve System, Summary of Economic Projections, March 17, 2021, p. 2. 53 For example, see Olivier Blanchard, In Defense of Concerns over the $1.9 Trillion Relief Plan, Peterson Institute for International Economics, February 18, 2021, at https://www.piie.com/blogs/realtime-economic-issues-watch/defense-concerns-over-19-trillion-relief-plan; and Lawrence H. Summers, “ Opinion: T he Biden Stimulus Is Admirably Ambitious. But It Brings Some Big Risks, T oo,” Washington Post, February 4, 2021, at https://www.washingtonpost.com/opinions/2021/02/04/larry-summers-biden-covid-stimulus/. 54 For more information about the future path of inflation, see CRS Insight IN11644, Is High Inflation a Risk in 2021? by Mark P. Keightley, Marc Labonte, and Lida R. Weinstock . Congressional Research Service 16 COVID-19 and the U.S. Economy Future Economic Outlook Economic Uncertainty Although the economy has begun to recover from the effects of the COVID-19 pandemic, how long it wil take for the economy to fully recover is uncertain. GDP and unemployment improved in the latter half of 2020 but stil remained depressed and elevated, respectively, from prior to the pandemic. The recovery has also slowed somewhat since the third quarter of 2020—real GDP rose by a historic annualized 33.4% in the third quarter of 2020, 4.3% in the fourth quarter of 2020, and 6.4% in the first quarter of 2021.55 Unemployment fel to 6.9% in October 2020 from a high of 14.8% in April 2020 but has fal en only to 6.1% as of April 2021.56 To a large extent, the economy is unlikely to fully recover until the pandemic has ended. Therefore, economic activity may depend on factors such as when most of the U.S. population wil be vaccinated, how effective the vaccine is against new variants, or other advances in treatment. In this case, forecasting when employment wil recover may be difficult. Yet current projections suggest possible long-run economic impacts. CBO forecasts, as of February 2021, that real GDP wil remain below its potential until 2025 and the unemployment rate wil remain elevated for several years, dropping below 5% by 2023 and below 4% by 2026.57 The forecast assumes no policy changes (and therefore does not take the American Rescue Plan Act of 2021 into account) and is subject to change. Other forecasts are more optimistic about the rate of recovery.58 Once~~help expedite a recovery.”42~~
~~Provision Expirations and Future Policy~~
~~As discussed previously, CBO projected that the stimulus had a significant positive effect on the~~
~~economy in the short run; however, many of the provisions of the CARES Act have expired or~~
~~been exhausted,43 which will also have an effect on the economy. Of note, the Payroll Protection~~
~~Program closed on August 8,44 nearly 90% of the $300 billion in direct support economic~~
~~payments provided for in the CARES Act were made as of August 28,45 and the temporary~~
~~increase of $600 per week in unemployment benefits expired on July 31.~~
~~Despite gains to many economic indicators since April, the economy is still not fully recovered.~~
~~Without additional federal aid, certain industries, including the airline industry, are preparing to~~
~~furlough and layoff significant portions of their workforces.46 Surveys of small businesses,~~
~~including the Census Pulse Survey and the U.S. Chamber of Commerce Coronavirus Small~~
~~Business Impact Poll, indicate that small businesses feel insecure.47 According to the Financial~~
~~Stress Index from the Pulse Survey, financial stress among small businesses improved between~~

~~41 CBO, The Effects of Pandemic-Related Legislation on Output, September 2020, at https://www.cbo.gov/system/files/~~
~~2020-09/56537-pandemic-legislation.pdf.~~
~~42 CBO, The Effects of Pandemic-Related Legislation on Output, September 2020, at https://www.cbo.gov/system/files/~~
~~2020-09/56537-pandemic-legislation.pdf.~~
~~43 For more detailed information on the expiration and exhaustion of provisions, see CRS Insight IN11475,~~ ~~Economic~~
~~Activity and the Expiration of COVID-19 Relief Provisions, by Grant A. Driessen and Lida R. Weinstock.~~
~~44 U.S. Small Business Administration, Paycheck Protection Program: An SBA Loan That Helps Businesses Keep~~
~~Their Workforce Employed During the Coronavirus (COVID-19) Crisis, at https://www.sba.gov/funding-programs/~~
~~loans/coronavirus-relief-options/paycheck-protection-program.~~
~~45 Internal Revenue Service, “IRS Statement on Economic Impact Payments by state (as of Aug. 28, 2020),” August 28,~~
~~2020, at https://www.irs.gov/newsroom/irs-statement-on-economic-impact-payments-by-state-as-of-aug-28-2020.~~
~~46 For example, see Patrick Thomas, Sarah Chaney, and Chip Cutter, “New Covid-19 Layoffs Make Job Reductions~~
~~Permanent,” The Wall Street Journal, August 28, 2020, at https://www.wsj.com/articles/new-covid-19-layoffs-make-~~
~~job-reductions-permanent-11598654257; and Andrew Van Dam, “As Permanent Economic Damage Piles Up, the~~
~~Covid Crisis is Looking More Like the Great Recession,” The Washington Post, August 25, 2020, at~~
~~https://www.washingtonpost.com/business/2020/08/25/permanent-economic-damage-piles-up-covid-crisis-is-looking-~~
~~more-like-great-recession/.~~
~~47 See, e.g., U.S. Census Bureau, Small Business Pulse Survey, October 8, 2020, at https://portal.census.gov/pulse/data/;~~
~~and MetLife & U.S. Chamber of Commerce, Small Business Coronavirus Impact Poll, July 29, 2020, p. 2, at~~
~~https://www.uschamber.com/sites/default/files/metlife_uscc_sbi_coronavirus_impact_poll_july.pdf.~~
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~~COVID-19 and the U.S. Economy~~

~~the beginning of the survey in April and the week of August 16-22, but has shown no~~
~~improvement between August 16-22 and October 4-12.48~~
~~Although there are certain short-term benefits to additional stimulus, there would also be~~
~~tradeoffs. As shown in the previous section, fiscal policy enacted in March and April 2020~~
~~showed significant gains to GDP in the short run, but by the end of 2021, CBO projects the gains~~
~~from policy are minimal. Additional stimulus would also increase the debt-to-GDP ratio, already~~
~~at 135.6% in the second quarter of 2020—the highest since World War II.49 Increasing the~~
~~national debt could be cause for future austerity measures, which would hinder growth.~~
~~Future fiscal policy remains uncertain at this point. As scored by CBO, the CARES Act will~~
~~increase federal deficits by about $1.7 trillion over the 2020-2030 period,50 and Congress has~~
~~been debating an additional stimulus package. The Heroes Act (H.R. 925), as adopted by the~~
~~House on October 1, would increase the deficit by $2.4 trillion over the 2021-2030 period.51 A~~
~~previous “Heroes Act,” H.R. 6800, which passed the House on May 15, has not been scored by~~
~~CBO. The Senate has yet to pass any bills, most recently holding a cloture vote on October 21 on~~
~~the Delivering Immediate Relief to America’s Families, Schools and Small Businesses Act~~
~~(S.Amdt. 2652), which was not invoked by a vote of 51-44. CBO has estimated that if passed, this~~
~~legislation would increase the deficit by $519.3 billion over the 2021-2030 period.52~~
~~The path of monetary policy is more evident at this point. The Federal Reserve’s emergency~~
~~lending facilities are set to expire at the end of the year,53 although these facilities could be~~
~~extended. The Federal Reserve has additionally already indicated it will keep the federal funds~~
~~rate close to zero for the foreseeable future.54~~
~~Future Economic Outlook~~
~~Economic Uncertainty~~
~~One of the key features of the current recession is the higher than average amount of uncertainty.~~
~~The macroeconomic outlook is largely being driven by a public health crisis that is, in and of~~
~~itself, difficult to predict. As of July, CBO forecasts that real GDP will remain below potential~~
~~and that the unemployment rate will remain above the 2019 rate for the remainder of the decade.55~~

~~48 U.S. Census Bureau, Small Business Pulse Survey, October 8, 2020, at https://portal.census.gov/pulse/data/#weekly.~~
~~49 Federal Reserve Bank of St. Louis and U.S. Office of Management and Budget, “Federal Debt: Total Public Debt as~~
~~Percent of Gross Domestic Product [GFDEGDQ188S],” retrieved from FRED, Federal Reserve Bank of St. Louis, at~~
~~https://fred.stlouisfed.org/series/GFDEGDQ188S, October 20, 2020.~~
~~50 CBO, H.R. 748, CARES Act, P.L. 116-136, April 16, 2020, at https://www.cbo.gov/publication/56334.~~
~~51 CBO, H.R. 925, Heroes Act, October 16, 2020, at https://www.cbo.gov/publication/56686.~~
~~52 CBO, Estimate for Senate Amendment 2652 to S. 178, the Delivering Immediate Relief to America’s Families,~~
~~Schools and Small Businesses Act, October 21, 2020, at https://www.cbo.gov/publication/56694.~~
~~53 Board of Governors of the Federal Reserve System, “Federal Reserve Board Announces an Extension Through~~
~~December 31 of Its Lending Facilities That Were Scheduled to Expire On or Around September 30,” press release, July~~
~~2020, at https://www.federalreserve.gov/newsevents/pressreleases/monetary20200728a.htm.~~
~~54 Board of Governors of the Federal Reserve System, “Federal Reserve Issues FOMC Statement,” press release,~~
~~September 16, 2020, at https://www.federalreserve.gov/newsevents/pressreleases/monetary20200916a.htm.~~
~~55 CBO, An Update to the Economic Outlook: 2020 to 2030, July 2, 2020, at https://www.cbo.gov/publication/56442.~~
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~~COVID-19 and the U.S. Economy~~

~~These forecasts assume no policy changes or additional stimulus, meaning that future policy has~~
~~the ability to improve (or worsen) the forecast.56~~
~~To a large extent, the economy cannot fully recover until the pandemic has ended. Fears of the~~
~~virus and social distancing make it unlikely that commerce can regain its pre-pandemic pace~~
~~while COVID-19 still poses a threat. However, once~~ the public health crisis has passed, it is the public health crisis has passed, it is
possible possible that the economy the economy ~~would~~will recover at a relatively fast pace, as compared with other recessions. recover at a relatively fast pace, as compared with other recessions.
~~Normally~~Normal y, aggregate demand remains depressed and the economy could take several years to , aggregate demand remains depressed and the economy could take several years to
return to full employment after a recession. The current recession is different than past recessions return to full employment after a recession. The current recession is different than past recessions
in that it was caused not by an inherently economic or financial shock but by a public health in that it was caused not by an inherently economic or financial shock but by a public health
crisis. Given that the macro-fundamentals prior to the crisis. Given that the macro-fundamentals prior to the pandemic appeared to be sound, once the pandemic appeared to be sound, once the
cause of the recession has passed, it might be assumed that the economy can return to normal cause of the recession has passed, it might be assumed that the economy can return to normal
quickly. However, the longer the pandemic and resulting quickly. However, the longer the pandemic and resulting recession last, the more likely certain recession last, the more likely certain
effects are to be longer lasting as effects are to be longer lasting as ~~well~~wel . .
Potential Lasting Impacts
The depth and uncertainty of the COVID-19 pandemic and resultant recession have created The depth and uncertainty of the COVID-19 pandemic and resultant recession have created
speculation about potential long-lasting impacts to the economy. It is difficult to speculate about speculation about potential long-lasting impacts to the economy. It is difficult to speculate about
what lasting impacts there might be. To some extent, this what lasting impacts there might be. To some extent, this ~~will~~ wil be driven by the length of the be driven by the length of the
pandemic and any structural reforms the federal government might enact in response to the nature pandemic and any structural reforms the federal government might enact in response to the nature
of the crisis. Although speculation as to the permanence of any effect is difficult, there is some of the crisis. Although speculation as to the permanence of any effect is difficult, there is some
research about the economic effects of prior pandemics (most notably the Spanish Flu of 1918) research about the economic effects of prior pandemics (most notably the Spanish Flu of 1918)
that could be of some use in helping frame possible economic hurdles in the coming years. For that could be of some use in helping frame possible economic hurdles in the coming years. For
example, anecdotal evidence from the 1918 pandemic indicate that reduced investment in human example, anecdotal evidence from the 1918 pandemic indicate that reduced investment in human
capital could be a long-term problem because of any lasting morbidity among survivors and any capital could be a long-term problem because of any lasting morbidity among survivors and any
long-run pressure that might be put on long-run pressure that might be put on ~~healthcare~~health care and government assistance programs. 55 BEA, “Gross Domestic Product, First Quarter 2021 (Advance Estimate).” 56 BLS, The Employment Situation—April 2021, May 7, 2021, at https://www.bls.gov/news.release/empsit.nr0.htm. 57 CBO, An Overview of the Budget and Economic Outlook: 2021-2031, February 1, 2021, at https://www.cbo.gov/publication/56965. 58 For example, see Board of Governors of the Federal Reserve System, FOMC Economic Projections, March 17, 2021, at https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20210317.pdf. Congressional Research Service 17 COVID-19 and the U.S. Economy ~~and government assistance programs.~~ However, However,
the policy response to COVID-19 the policy response to COVID-19 ~~will~~ wil likely result in a more positive outcome than the likely result in a more positive outcome than the policy policy
response in 1918 did.response in 1918 did.5759
As discussed previously, unemployment may take a long time to reach pre-pandemic rates and As discussed previously, unemployment may take a long time to reach pre-pandemic rates and
GDP may take a long time to reach potential GDP, but both are expected to happen GDP may take a long time to reach potential GDP, but both are expected to happen ~~eventually~~eventual y. In . In
the aggregate, the economy may fully recover, but there could be longer-lasting impacts for the aggregate, the economy may fully recover, but there could be longer-lasting impacts for
specific groups of individuals. These groups may include those who work for industries that have specific groups of individuals. These groups may include those who work for industries that have
been hit hardest by the pandemic and may face higher and longer rates of unemployment,been hit hardest by the pandemic and may face higher and longer rates of unemployment,60
individualsindividuals from geographical areas that suffered large losses (both of lives and businesses), or from geographical areas that suffered large losses (both of lives and businesses), or
low-income individuals that could not bear the costs of the recession as easily as others. Some low-income individuals that could not bear the costs of the recession as easily as others. Some
have forecasted a “K-shaped” recovery, meaning that some groups of individuals and businesses have forecasted a “K-shaped” recovery, meaning that some groups of individuals and businesses
~~will~~ wil recover quickly, but the economic situation for others recover quickly, but the economic situation for others ~~will~~ wil worsen and take much longer to worsen and take much longer to
recover, if ever. For example, telework is possible in certain industries and has recover, if ever. For example, telework is possible in certain industries and has ~~allowed~~al owed work to work to
continue largely uninterrupted, whereas other industries require face-to-face services and have continue largely uninterrupted, whereas other industries require face-to-face services and have
been struggling due to decreased demand. If consumer preferences change as a result of the been struggling due to decreased demand. If consumer preferences change as a result of the
pandemic, this could mean a changing landscape for businesses. For example, if enough pandemic, this could mean a changing landscape for businesses. For example, if enough
individualsindividuals get used to cooking at home and eating out less, this could mean fewer restaurants get used to cooking at home and eating out less, this could mean fewer restaurants

~~56 CBO projections may not match other projections due to differences in underlying assumptions about the~~
~~epidemiology of the virus as well as future social distancing measures. For more information on forecasts of economic~~
~~activity and the recovery, see CRS Insight IN11460, COVID-19: How Quickly Will Unemployment Recover?, by Lida~~
~~R. Weinstock.~~
~~57 Vellore Arthi and John Parman,~~ ~~Disease, Downturns, and Wellbeing: Economic History and the Long-Run Impacts~~
~~of COVID-19, NBER, Working Paper no. 27805, September 2020, pp. 2, 23-24, at https://www.nber.org/papers/~~
~~w27805.pdf.~~
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~~COVID-19 and the U.S. Economy~~

~~will~~ wil exist in the future. Questions of consumer preferences and unemployment rates cannot be exist in the future. Questions of consumer preferences and unemployment rates cannot be
answered until there are data on consumer behavior after the pandemic has ended. answered until there are data on consumer behavior after the pandemic has ended.
In addition, further speculation exists about permanent changes to consumer behavior in the form In addition, further speculation exists about permanent changes to consumer behavior in the form
of the personal saving rate, which has increased during the pandemic. A permanent increase, of the personal saving rate, which has increased during the pandemic. A permanent increase,
which cannot be predicted with accuracy at this stage, would dampen the recovery in the short which cannot be predicted with accuracy at this stage, would dampen the recovery in the short
term, but might be a net positive for the economy in the long run. Another area that has seen much media speculation is changes to the nature of work. Given the overal increase in productivity and the switch to work-from-home for many industries, some speculate that these changes may be at least partial y permanent and that there wil be an increase in telework opportunities.61~~term, but might be a net positive for the economy in the long run.~~
~~The economic community has competing concerns about whether the country is facing low~~
~~inflation (or potentially even deflation) or high inflation in the coming months, and years. During~~
~~a recession, inflation typically declines, as falling aggregate demand puts downward pressure on~~
~~prices. However, rising inflation is often a concern during a recovery and expansion as~~
~~employment recovers and nears or reaches full employment. Rising employment has been~~
~~associated with rising inflation in the past but this relationship has been weaker in recent years.58~~
~~The Federal Reserve took certain actions, notably the rounds of quantitative easing that resulted~~
~~in a nearly $3 trillion increase in the Federal Reserve’s balance sheet in a matter of weeks,59~~
~~which contributed to a sizable increase in the money supply. According to conventional economic~~
~~theory, an increase in the money supply will result in an increase in inflation; however, during the~~
~~2007-2009 financial crisis, the Federal Reserve significantly increased the money supply without~~
~~inflation increasing meaningfully.60 Further, some disagree that high inflation is likely as the~~
~~economy recovers from the COVID-19 pandemic because the recovery’s pace has slowed in~~
~~recent months, the status of any future stimulus is uncertain, and the Federal Reserve’s credibility~~
~~will likely keep inflation expectations on track.61~~
~~Another area that has seen much media speculation is changes to the nature of work. Given the~~
~~overall increase in productivity and the switch to work-from-home for many industries, some~~
~~speculate that these changes may be at least partially permanent and that there will be an increase~~
~~in telework opportunities.62~~ It is, however, not necessarily evident that the increase in productivity It is, however, not necessarily evident that the increase in productivity
is a direct result of telework, and it is likely that some amount of innovation in the economy has is a direct result of telework, and it is likely that some amount of innovation in the economy has
been spurred out of necessity (e.g., research and development for a vaccine) and that innovation been spurred out of necessity (e.g., research and development for a vaccine) and that innovation
and then productivity may decrease once the crisis has passed. Changing norms and preferences and then productivity may decrease once the crisis has passed. Changing norms and preferences
towards more telework could towards more telework could ~~still~~ stil cause an increase in telework opportunities, even if telework cause an increase in telework opportunities, even if telework
turns out to be similarly or less productive than on-site work. Some prominent companies, turns out to be similarly or less productive than on-site work. Some prominent companies,
notably Twitter, have even already made the announcement that they notably Twitter, have even already made the announcement that they ~~will~~ wil provide the ability to provide the ability to
telework permanently.telework permanently.6362 Such a change at a large scale would have wide-ranging implications for Such a change at a large scale would have wide-ranging implications for
a variety of factors, including office space, transportation networks, IT services, and housing a variety of factors, including office space, transportation networks, IT services, and housing

~~58 For more information on the relationship between employment and inflation, see CRS In Focus IF10443,~~
Introduction to U.S. Economy: Unemployment, by Lida R. Weinstock.
~~59 Board of Governors of the Federal Reserve System, “Credit and Liquidity Programs and the Balance Sheet: Recent~~
~~Balance Sheet Trends,” at https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm.~~
~~60 Letter from John C. Williams, president and CEO of the Federal Reserve Bank of San Francisco, to Western~~
~~Economic Association International, July 2, 2012, at https://www.frbsf.org/economic-research/publications/economic-~~
~~letter/2012/july/monetary-policy-money-inflation/.~~
~~61 Sarah House and Michael Pugliese, “A Recipe for Higher Inflation?”~~ ~~Wells Fargo Securities Economics Group~~
~~Special Commentary, September 25, 2020, pp. 5-6.~~
~~62 Katherine Guyot and Isabel V. Sawhill, Telecommuting Will Likely Continue Long After the Pandemic, Brookings~~
~~Institution, Time and the Middle Class Series,~~ preferences. However, it is difficult to predict whether this type of action wil be widespread; for al the ardent supporters of this type of change, there are also detractors, and for the change to be 59 Vellore Arthi and John Parman, Disease, Downturns, and Wellbeing: Economic History and the Long-Run Impacts of COVID-19, NBER, Working Paper no. 27805, September 2020, pp. 2, 23 -24, at https://www.nber.org/papers/w27805.pdf. 60 For more information on industries most impacted by COVID-19 in terms of employment, see CRS Insight IN11564, COVID-19: Em ploym ent Across Industries, by Lida R. Weinstock. 61 Katherine Guyot and Isabel V. Sawhill, Telecommuting Will Likely Continue Long After the Pandemic, Brookings Institution, T ime and the Middle Class Series, April 6, 2020, at https://www.brookings.edu/blog/up-front/2020/04/06/April 6, 2020, at https://www.brookings.edu/blog/up-front/2020/04/06/
telecommuting-will-likely-continue-long-after-the-pandemic/. telecommuting-will-likely-continue-long-after-the-pandemic/.
6362 Jessica Jessica Guynn, “How Would You Like to Work from Home ‘Forever’? Guynn, “How Would You Like to Work from Home ‘Forever’? ~~Twitter~~T witter Is Encouraging Employees to Do Is Encouraging Employees to Do
So,”So,” USA Today, May 12, 2020, at https://www.usatoday.com/story/tech/2020/05/12/twitter-work-from-home-forever/, May 12, 2020, at https://www.usatoday.com/story/tech/2020/05/12/twitter-work-from-home-forever/
3118879001/. 3118879001/.
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COVID-19 and the U.S. Economy

~~preferences. However, it is difficult to predict whether this type of action will be widespread; for~~
~~all the ardent supporters of this type of change, there are also detractors, and for the change to be~~
widespread across industries, considerable structural changes and technological improvements widespread across industries, considerable structural changes and technological improvements
would need to be made.would need to be made.6463

Author Information

Lida R. Weinstock Lida R. Weinstock

Analyst in Macroeconomic Policy Analyst in Macroeconomic Policy

Disclaimer
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64 63 Organisation for Economic Cooperation and Development (OECD), “Productivity Gains from Organisation for Economic Cooperation and Development (OECD), “Productivity Gains from ~~Teleworking~~T eleworking in the in the
Post COVID-19 Era: HowPost COVID-19 Era: How Can Public Policies Make It Happen?” Can Public Policies Make It Happen?” OECD Policy Responses to Coronavirus, September , September
7, 2020, at https://www.oecd.org/coronavirus/policy-responses/productivity-gains-from-teleworking-in-the-post-covid-7, 2020, at https://www.oecd.org/coronavirus/policy-responses/productivity-gains-from-teleworking-in-the-post-covid-
19-era-a5d52e99/. 19-era-a5d52e99/.
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