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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.

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.” Federal Reserve Bank of Cleveland, Working Paper No. 20-12R. https://doi.org/10.26509/frbc-wp-202012r