Steven Fazzari, the Bert A. and Jeanette L. Lynch Distinguished Professor of Economics
Social distancing in response to the coronavirus pandemic, it has quickly become clear, will create severe economic fallout. Large parts of the U.S. economy have almost entirely shut down. New unemployment claims have surged dramatically, dwarfing past records, both nationally and in Missouri.
I’ve analyzed data from several economic sectors most affected by the crisis. In 2018, these sectors totaled 18.5% of aggregate U.S. output (gross domestic product). We don’t yet know how much each will contract, but to roughly calculate the severity of the coming downturn, I estimated each sector’s lost output between mid-March and the worst week of the crisis, which is likely to occur during the second quarter. Contraction estimates range from 20% in wholesale, 40% in retail, and 80% for air transportation, restaurants, entertainment, recreation and hotel accommodation.
While much uncertainty remains, the possible effect on total U.S. gross domestic product is stunning: a drop of nearly 8% in just a few months.
Read the full piece in the St. Louis Post-Dispatch.
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