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


A tailor-made survey documents consumer perceptions of the U.S. economy’s response to a large shock: the advent of the COVID-19 pandemic. The survey ran at a daily frequency between March 2020 and July 2021. Consumer perceptions regarding output and inflation react rapidly. Uncertainty is pervasive. A business-cycle model calibrated to the consumer views provides an interpretation. The rise in household uncertainty amplifies the pandemic recession by a factor of three. Different perceptions about monetary policy can explain why consumers and professional forecasters agree on the recessionary impact, but have sharply divergent views about inflation.

Keywords: Consumer expectations, Survey, Large shock, Uncertainty, Monetary Policy.
JEL classification codes: C83, E32, E52.


Suggested citation: Dietrich, Alexander M., Keith Kuester, Gernot J. Müller, and Raphael S. Schoenle. 2021. "News and uncertainty about COVID-19: Survey evidence and short-run economic impact." Working Paper No. 20-12R. Federal Reserve Bank of Cleveland. https://doi.org/10.26509/frbc-wp-202012r.

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