CROWE Data Briefs are short, regular reports meant to highlight timely and important topics. The format is short, punchy, and centered around a few key pieces of data. Data briefs bring economic and policy discussions down to the personal level, showing how economic issues affect individuals and communities.
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Job Openings and Labor Market Tightness During the COVID-19 Pandemic (Junjie Guo, Feb 18, 2021. Updated February 10, 2022)
This data brief reports the current status and the evolution of job openings and labor market tightness in the U.S. and Wisconsin. The latest data suggest that the number of job openings per capita is 4% in the U.S. and 4.5% in Wisconsin, significantly higher than their pre-pandemic levels of around 2.7% and 3.4%, respectively. The same is true for the number of new online job postings, which increased by about 26% between January 2020 and January 2022 in the U.S., and by about 20% in Wisconsin. In comparison, the number of unemployed workers in the U.S. dropped by about 8% between January 2020 and December 2021, and it dropped by about 43% in Wisconsin. Together, the numbers suggest the labor markets in both the U.S. and Wisconsin are much tighter now than it was before the pandemic. However, there are some heterogeneities both across states and across sectors within a state. For example, the number of job openings per unemployed worker has not recovered to its pre-pandemic level in 8 states, including Colorado and Hawaii, and the increase in the number of new online job postings in Wisconsin between January 2020 and January 2022 is much larger for the manufacturing sector than it is for leisure and hospitality.
Wisconsin's economy: March 2022 (Kim Ruhl, March 3, 2022)
By many indicators, the Wisconsin economy has recovered to pre-pandemic levels or beyond, while inflation has run high both in absolute terms and relative to the rest of the United States.
Employment: Most indicators point to a tight labor market. Initial unemployment claims have returned to their 2019 levels. The December 2021 state unemployment rate stands at 3.1 percent. In the December data, Wisconsin has the 10th-lowest unemployment rate among U.S. states. Among Wisconsin metropolitan areas, Madison has the lowest unemployment rate (1.4 percent, not seasonally adjusted) and Racine the highest (2.4 percent, not seasonally adjusted).
Retail trade: Total retail trade growth in Wisconsin has returned to pre-pandemic levels. We continue to see strong growth in the sporting goods and hobby, building materials, and gasoline retail sectors.
Inflation: Midwest-region inflation rates remain elevated at 6.9 percent (year over year) in January 2022. Inflation is positive in all sectors of the economy, with transportation inflation at 22
percent in December. Food prices continue to rise and the food-and-beverage sector inflation rate is currently 7.5 percent.
Share prices: The index of publicly-traded firms headquartered in Wisconsin had caught up to the S&P 500 in early 2021, after lagging the major index for all of 2020. Beginning in May
2021, the Wisconsin index has fallen behind the S&P 500 and remains below the benchmark index.
Business Formation and Employment Dynamics during the COVID-19 Pandemic (Simeon Alder, Feb 26, 2021, Updated Sep 3, 2021)
This update includes a summary of the most recent weeks of applications for Employer Identification Numbers (EINs) in Wisconsin and five additional Midwestern states. Two trends have emerged more clearly since our July 30, 2021 update: (1) Weekly business applications have been gradually declining since early April, not just in Wisconsin, but across the Midwest and the nation. (2) The flow of applications in the second semester of 2021 so far is significantly lower than in 2021. Together, these two trends suggest that the forces behind the surge in business applications during the COVID-19 pandemic may be losing some steam. In particular, the end of the Federal Pandemic Unemployment Compensation (FPUC) program on September 4, 2021, may further dampen the evolution of business dynamism in the coming weeks and months
More Early Evidence on the End of Expanded Federal Unemployment Benefits (Noah Williams, 20 August, 2021)
Beginning in May a number of states announced that they would be ending participation in the federal enhanced and expanded unemployment benefit programs instituted during the COVID-19 pandemic. In total, 26 states decided to end their participation in these programs before their scheduled expiration in September. This note uses data from the Bureau of Labor Statistics monthly household and payroll employment surveys, which now includes data through July. Due to this data limitation, I focus on the 22 states that ended federal benefits in June.
Most of these states announced the end of the enhanced federal unemployment benefits at least one month prior to their expiration, with the earliest announcements starting in mid-May. Since the reference week for the BLS surveys is the calendar week including the 12th of the month, I take the May survey as the baseline. Grouping the states into those terminating benefits in June and the rest of the US, I then compare the growth rates of various employment indicators over the two months following May to that of the preceding two months.
While caution should be exercised given the very short data sample, the results suggest that ending enhanced benefits had a positive impact on the labor market. Across all indicators I find that the terminating states experienced improved labor market outcomes relative to the rest of the US. Employment growth accelerated by more in these states in both the household and payroll surveys, and the labor force grew more rapidly. The relative gains in private employment were even more than total employment, and employment growth in the leisure and hospitality sector was especially strong in the terminating states. This is notable since this sector was hit hard by the COVID-19 pandemic recession, and due to its low average wages, was likely most affected by disincentive effects of the enhanced unemployment benefits.
Employment Effects of Ending of Expanded Federal Unemployment Benefits (Noah Williams, July 28, 2021)
Beginning in May a number of states announced that they would be ending participation in the federal enhanced and expanded unemployment insurance (UI) benefit programs instituted during the COVID-19 pandemic. In this brief, I focus on the first 12 of these: the four states who ended benefits on June 12, and the additional eight states ending on June 19. I use private data from Homebase, which provides daily employment records for a sample of mostly small businesses with hourly workers, largely concentrated in accommodation and food services. This sample was hit hard by the COVID-19 pandemic recession, and due to its lower average wages, would likely be most affected by disincentive effects of the enhanced UI benefits.
I find a notable, but modest, employment impact of the enhanced unemployment benefit termination. Shortly after the states announced they would be ending the federal UI enhancements in mid-May, employment in the terminating states began increasing relative to the rest of the United States. Two weeks after the announcements, employment among these lower wage hourly workers increased by about 1.5% on average in the terminating states relative to the rest of the US. After this two week adjustment period, the employment gap was relatively stable over the rest of the sample, apart from closures for the Independence Day holiday. While employment has continued to recover in this sector across the US, the termination of the enhanced federal unemployment benefits seems to have provided a modest employment boost.
Current Private Indicators on the Wisconsin Economy: Small Business Employment and Consumer Spending (Noah Williams, July 22, 2021)
I use two private data sources to analyze the labor market and consumer spending in the state of Wisconsin. I first analyze labor market data from a sample of mostly small businesses. With the onset of the COVID-19 pandemic, by midApril 2020 48% of these businesses were closed, with employment down 59%. A sharp recovery followed, which flattened out in the summer, and tailed off in the fall of 2020 with the spike in virus activity. After months of relative stability from November 2020-April 2021, employment has grown sharply over the past three months. Employment has largely returned to pre-pandemic levels, after increasing 18 percentage points since mid-April. While employment has grown, open locations have leveled off, with roughly 1 in 6 small businesses closing permanently since March 2020.
The food and drink sector had a larger 72% employment drop in April 2020, as locations remaining open had minimal staffing. As these establishments reopened, they brought back more workers. However this sector’s recovery stalled earlier and employment suffered a larger decline during fall 2020, which stabilized into 2021. This sector also saw strong growth over the last three months, but employment still remains 13% below pre-pandemic levels. There were also more permanent closures: roughly 1 in 4 food and drink businesses in Wisconsin closed permanently since March 2020.
I also analyze transactions data on consumer spending, which had a sharper and more sustained recovery than the labor market. After plummeting in April 2020, spending in Wisconsin recovered rapidly, with year-over-year gains from May throughout the rest of the year. Consumption was supported by income growth, and changes in consumption patterns cushioned the impact of the pandemic. Consumption has seen strong growth during the spring of 2021, fueled both by recovery from the pandemic and usual cyclical factors. Relative to mid-July 2019, the two-year cumulative growth is 8.2% in Wisconsin and 5.6% nationally.
During the pandemic, consumers shifted away from social spending toward spending at home, but in recent months many of these trends have reversed. Spending on groceries soared while restaurants plummeted during the pandemic. But restaurants have seen strong growth in 2021, with spending now up 30.1% from pre-pandemic levels while grocery spending has cooled but is still up 9.6%. During the pandemic, consumers spent less on events and travel, and more on home goods. But events and travel have seen strong growth in 2021, now surpassing pre-pandemic levels. After spiking early, online spending has remained high (up 28.9%), while in-store have surpassed pre-pandemic levels (up 21.9% and 8.7% above 2019 levels) after a sharp fall in the pandemic. Recent weeks have seen a return of in-store sales and a cooling of online activity as virus activity in the state abated and remaining health restrictions have eased.
Early Evidence on the End of Expanded Federal Unemployment Benefits (Noah Williams, 30 July, 2021, First posted: June 28 2021)
Beginning in May a number of states announced that they would be ending participation in the federal enhanced and expanded unemployment benefit programs instituted during the COVID-19 pandemic. In total, 26 states decided to end their participation in these programs before their scheduled expiration in September. Due to limited data, this report focuses on the first four states that ended benefits on June 12, and the additional eight states that ended them on June 19.
Data on continued claims, counting the total number of workers claiming unemployment benefits on the regular state unemployment insurance programs, is available through July 17, four or five weeks after expiration of the enhanced benefits in these states. I find that the first four states experienced a substantial drop of 26.3% in continued unemployment claims since June 5, the next eight states saw a decline of 15.1%, and the rest of the US dropped only 0.1%. Moreover, Alabama (in the group of eight) had an anomalous spike in benefits the week after expiration, which has since faded. Excluding Alabama, the other seven states in the second group saw a 21.3% drop. Since the week ending May 8, the week before program most of the terminations were announced, the first four states saw a 31.4% drop in continued claims, the next eight had a decline of 27.3% (31.3% excluding Alabama), and the rest of the US dropped by 10.2%.
Initial results suggest that the announcement and expiration of expanded unemployment benefits were accompanied by a decline in initial unemployment claims, followed by a decline in continued claims. Thus, in addition to the direct impact of reducing unemployed claimants on the enhanced and extended federal benefits programs, the terminations also reduced the number of unemployed workers filing for the regular state unemployment insurance programs, whose effective benefits were cut but whose eligibility was unaffected.
Labor Markets in the US and Wisconsin: Current State and Long-run Trends (Noah Williams, June 25, 2021)
I survey the current state of labor markets in the United States and the state of Wisconsin. In recent weeks the labor market has become a primary focus of economic and policy discussions, with job openings soaring to record levels while employment gains have slowed. Overall, the labor market in Wisconsin is currently tighter than nationwide, with the state having seen larger drop in unemployment and a larger increase in job openings in recent months. Moreover, the data suggests that labor supply issues have held back employment gains, whether from elevated unemployment insurance benefits, increased childcare duties with disrupted schooling, or continuing heath concerns.
While most of the factors causing the acute labor supply disruptions will lessen by the fall, long-term trends suggest reduced labor supply well into the future. All of these trends are stronger in Wisconsin than the nation overall. The state has seen a stagnant labor force for more than a decade. Labor force participation rates have been trending down for decades, driven largely by the aging of the population. Moreover births have fallen sharply in recent years and school enrollments have declined, suggesting smaller cohorts entering the labor market in years to come. While the “homegrown” labor force is set to shrink in coming years, migration is not likely to add many workers either. In recent years Wisconsin has seen small net domestic outflows to other states and small net positive total inflows due to international immigration. This suggests that, barring major changes in state or federal policy, drawing in new workers is unlikely to be a significant source of labor force growth for the state in the near future.
In sum, while there is much current discussion of a “labor shortage” due to acute short-term problems, in the long term the state is likely to face a declining labor force for years to come, which may have more dramatic implications.
The Distribution of Income and Income Taxes in Wisconsin (Noah Williams, March 19, 2021)
The Wisconsin Department of Revenue has recently released some summary statistics from Wisconsin state income tax returns, covering the years 2014-2019. These data provide insight on the distribution of income and income taxes in the state. In particular, I find that:
1. Reported incomes in Wisconsin have grown across the income distribution from 2014-2019, but the increases have been largest at the low end of the distribution.
2. The state’s income tax is progressive, with a large share of taxes paid by the highest income groups. The degree of progressivity has remained relatively constant since 2014.
State and Local Government Revenue During the COVID-19 Pandemic (Noah Williams, Feb 12, 2021)
While the early months of the COVID-19 pandemic put stress on the budgets of state and local governments around the country, their tax revenues have since rebounded. In addition, the federal government has already allocated substantial aid to these governments, which has more than offset the losses they have suffered. In particular, after nationwide state and local tax revenue fell by over 17% from the first to the second quarter of 2020, it bounced back strongly in the second half of the year and ended 2020 up 1.3% over 2019 – roughly constant in real terms. In addition, during 2020 the federal government sent $280 billion in transfers to these governments, and has already allocated an additional $120 billion in aid. These federal transfers led to growth of 8.9% in real revenue for state and local governments. In this brief, I document the recovery in state and local government total revenues and tax revenue, as well the distribution of revenue growth across states and discuss other sources of state fiscal support.
Note: The material in this brief formed the basis for the City Journal article, “Their Cups Runneth Over”
"Wisconsin’s labor market and COVID-19" by Kim Ruhl, July 24, 2020 (updated Feb 5, 2021)
This brief reports labor-market indicators for Wisconsin to demonstrate the effects of COVID-19 on labor supply and demand. This report is part of a larger effort at CROWE to document and analyze the economic fallout of the COVID-19 pandemic.
"The COVID-19 Recovery Has Stalled" by Noah Williams, July 24, 2020
After a rapid and deep crash with the onset of the COVID-19 pandemic and associated lockdowns, economic activity rebounded sharply from mid-April through the end of June across the country. However activity has fallen from its peaks in early July and has been flat over the past ten days or so, roughly in line with the spread of the virus and the reimposition of more stringent public health restrictions in different locations. In many states economic activity by mid-July was back where it was roughly one month earlier, if not lower.
"The Economic Impact of the Wisconsin Supreme Court Ruling Invalidating the State’s Safer at Home Order" by Junjie Guo, July 3, 2020
In a 4-3 ruling, the Wisconsin Supreme Court invalidated the state’s Safer at Home order on May 13, 2020, allowing most non-essential businesses to open immediately in most locations. Using several real-time measures, I find broad evidence suggesting a positive impact of the Supreme Court decision on economic activity. From May 13 to May 27, relative to states where non-essential businesses were shut down, Wisconsin experienced a larger increase in the number of small businesses open (7.8 ppts), net revenue for small businesses (4.6 ppts), employment of low-income workers (0.8 ppts), earnings of lowincome workers (1.6 ppts), individual mobility as measured by GPS data on time spent outside residential locations (3.2 ppts) and consumer credit/debit card spending (3.1 ppts). The impact appears to be larger for sectors closely related to accommodation and food services. However, because these sectors were hit especially hard initially, the gap in year-over-year activity for these sectors was still larger than the gap for the overall economy two weeks after the Supreme Court decision.
Qualitatively, the evidence suggests the state’s Safer at Home order was binding, and its invalidation contributed to economic recovery. Quantitatively, the impact is not very large, reducing the initial gap in year-over-year activity on May 13 by less than a quarter for majority of the economic measures, and the responses from households seem to be slower and smaller than firms. Overall, the evidence suggests a modest role of the Safer at Home order on economic activity, consistent with my previous analysis of the initial impact of the order’s implementation as well as similar analyses by others.
"Protest Dynamics: Evidence from Foot Traffic data" by Noah Williams, June 26, 2020
Following the killing of George Floyd in Minneapolis on May 25, there have been substantial protests in many cities around the country, and indeed around the world. In this brief I use foot traffic data to analyze the dynamics of the protests at different locations around the United States. In both Minneapolis and Washington, DC, I find protests growing in scale to a peak, and diminishing thereafter. Since early June, overall activity has dropped substantially in the zip code in Minneapolis that was at the heart of the protests, likely due to sustained damage at area businesses. In Washington, protest activity around the White House started later, growing to a peak on June 6. Activity has declined since then, but remains elevated relative to April and May, and has spiked on weekends. Overall, I find that the protests led to isolated spikes in activity at particular locations. But the protests did not substantially impact overall measures of activity in the metro areas where they took place.
"The Wisconsin Economy During COVID-19: Lockdown and Reopening" by Noah Williams, June 11, 2020 (updated Oct 23, 2020)
This brief summarizes data on the Wisconsin economy since the onset of the COVID-19 pandemic. In particular, I analyze economic activity using foot traffic at commercial locations around the state.
This brief summarizes data on the Wisconsin economy since the onset of the COVID-19 pandemic. In particular, I analyze economic activity using foot traffic at commercial locations around the state.
Since the last update on October 2 (reflecting data through September 30), Wisconsin has experienced a slight rebound in economic activity. While activity had slumped beginning in early September, a recovery began in late September and continued through mid-October. Nonetheless, the overall picture of the last several months has been one of relative stagnation, with overall foot traffic measures relatively unchanged between mid-July and late October.
Over the last three weeks, overall foot traffic from SafeGraph data has risen by about 6 percentage points, but this only returns the indicators to levels from July, and still down 28% year-over-year.
The Madison metro area continues to lag activity in the rest of the state and remains more 40% down from a year ago. The is a consequence of the continued relative closure of UW-Madison and absence of campus events, along with relatively tighter public health guidelines.
Data from the small business sector shows a more sustained downward trend, with employment down by about 10 percentage points since the end of August, and about 14 percentage points in the food and drink sector. Especially notable in the food and drink sector has been the gap that’s opened between open locations and employment. This reflects a substantial reduction in staffing at those establishments that have been able to remain open in this era of reduced capacity and social distancing.
"Business Formation during the COVID-19 Pandemic" by Simeon Alder, June 11, 2020 (updated Sep 25, 2020)
The COVID-19 pandemic has led to widespread disruptions in the U.S. economy, especially in labor markets. In addition to the widely reported rise in unemployment and job losses, there is timely and high-frequency data that shows a significant disruption in early-stage business formation. Using the Census Bureau’s Business Formation Statistics (BFS), which tracks applications for Employer Identification Numbers (EINs) at the weekly frequency, this report explores the link between labor market fluctuations and early stage business formation. We find that changes in employment and labor force participation rates play a fairly limited role in accounting for business formation in “normal” times. Both the employment and labor force participation rates change very slowly and virtually all growth in applications per capita is accounted for by a rise in applications per worker.
During the COVID-19 pandemic, however, labor market disruptions of a truly unprecedented magnitude play a far more prominent role in explaining the collapse of business formation in the US. Typically, changes in the employment and labor force participation rate account for half or more of the observed decline in applications per capita. While there are signs of a recovery in the number of business applications in the second half of May, it is too early to connect these developments to state-level labor market data.
One of our concerns is that a prolonged decline in the labor force participation rate may have a scarring effect on business formation. While this effect is not specific to Wisconsin, it would exacerbate the state’s previously documented lack of business dynamism and the Center is therefore monitoring future labor market and business formation developments closely.
This update to the “Business Formation during the COVID-19 Pandemic” report includes the business formation statistics from calendar weeks 39 through 42 and the state-level labor market data for the month of September. Labor market conditions and business applications are linked using the same accounting approach as the original report and the four previous updates. Two broad trends characterize the evolution of business formation since our previous update. First, the strength of the rebound is gradually losing steam, but continues above trend compared to previous years. The recovery is broad-based in that applications exceed the levels of prior years in virtually every state. Moreover, the recovery encompasses the more promising “high-propensity” applications. Thanks to this fairly sustained uptick in applications the cumulative number of applications through week 42 is exceeding comparable year-to-date numbers in previous years by a significant margin. Barring a sharp contraction in the flow of applications later this year, full-year totals are likely to exceed the levels from prior years. Second, the rise in applications can be attributed to a sustained rise in the number of applications per employed worker, rather than significant improvements in local labor markets. In fact, the labor force participation and employment rates for September continue to be weak by historical standards, but marginally improved compared to August. With the exception of Michigan and Indiana, all Midwestern states made gains in the employment rate of approximately one percentage point. The picture for the labor force participation rate is more mixed: Wisconsin’s roughly returned to 2019 levels while Iowa’s gap widened by an additional 0.6 points to -8.5 percent compared to the September rate in 2019.
For a more detailed discussion of the underlying methodology and data sources, the interested reader may want to review the original report, released on June 12, 2020.
"Reopening the Economy: Early Evidence from Georgia" by Noah Williams, May 14, 2020 (updated May 29, 2020)
After implementing stay-at-home orders to slow the spread of the COVID-19, over the past couple of weeks, a number of states have moved toward “reopening” their economies. Georgia has had one of the earliest and most comprehensive reopening plans. I compare economic activity in Georgia and Wisconsin, which had remained under a stay-at home order until a recent state Supreme Court decision. I find that activity in both states was very similar during the early pandemic and stay-at-home orders. However the removal of restrictions in Georgia has been followed by a 10 percentage point increase in activity over the past three weeks, with slightly larger gains in industries particularly targeted for earlier reopening. Activity in Georgia remains 35% below 2019 levels, thus the gains after reopening accounted for roughly 22% of the gap (10 points out of 45), consistent with previous causal estimates of the impact of stay-at-home orders.
"Measuring proximity to others in the workplace" by Kim Ruhl, May 5, 2020
As governments grapple with the costs of social distancing, a discussion has emerged about how “reopening” the economy might work. Most proposals suggest a staged reopening, beginning with relatively low-risk sectors. How can we identify low-risk sectors? In this brief we use data on the proximity to others while working to study this issue.
"The Impact of Statewide Stay-at-Home Orders: Estimating the Heterogeneous Effects Using GPS Data from Mobile Devices" by Junjie Guo, April 29, 2020
In response to the spread of COVID-19, most states in the U.S. have ordered nonessential businesses to close and residents to not leave home unless necessary. This paper estimates the impact of these stay-at-home orders on the mobility of Americans using GPS data from mobile devices. Recognizing the heterogeneity in both mobility and the orders across states, I use the synthetic control method at the state level to estimate the impact of individual orders instead of pooling them together for an average effect. I find the impact does vary significantly across orders/states. For example, the estimates suggest that the orders in Michigan and Wisconsin increased the fraction of their residents at home all day by about 5.5 and 4 percentage points, respectively, while the corresponding estimate for Ohio is small and insignificant. In addition to the effectiveness of the orders in limiting the spread of COVID-19, these estimates are also informative of the responsiveness of Americans when the orders would be lifted.
"Consumer Responses to the COVID-19 Pandemic" by Noah Williams, April 16, 2020 (latest update : April 23, 2020)
As the COVID-19 pandemic has spread across the United States, consumers have changed their spending habits dramatically. Initially, the changes began with people canceling inessential travel, limiting attendance at large gatherings, generally limiting social exposure, and moving from purchases in-store to online. Social distancing guidelines in most of the US tightened throughout the month of March, with the issuance of public emergency declarations, and an increasing number of states implementing “stay-at-home” orders closing down non-essential businesses. These changes, and the increasing severity of the crisis, accelerated the changes in consumer behavior, and also led to spikes in certain purchases, particularly at grocery stores. By the end of March and into April, consumer behavior has roughly stabilized, but with vastly different buying patterns and behavior compared to only a few weeks ago.
In this brief I analyze consumption trends nationwide and in Wisconsin, using a new data source of weekly transactions. I find that the recent monthly decline of roughly 9% in national retail sales masks a 10% increase mid-March and a 20% decline by the end of the month. There was a spike in grocery store sales of 80% nationwide and 100% in Wisconsin mid-March, driven as much by a growth in sales-per-transaction as transactions. The consumption decline overall was cushioned by increasing on-line sales, which also reallocated sales. In Wisconsin, total sales were down 15% at the end of March, but in-store sales were down 30%, with online sales up 20%.
"Air Traffic Data as a Proxy for Economic Activity in the Transportation Sector" by Simeon Alder, April 8, 2020
The imposition of numerous social distancing measures in response to the COVID-19 pandemic has curtailed economic activity significantly. The impact, however, varies across industries and one of the challenges at this time is to measure the impact in a timely manner. One sector that has been affected significantly is air transportation. Measures ranging from outright quarantines to milder “Safer at Home” directives have been associated with a sharp decline in mobility – both internationally and domestically – and the number of airline passengers has fallen sharply in recent weeks.
In this brief we use daily departure information at Wisconsin’s three major commercial airports, General Mitchell International Airport in Milwaukee, Dane County Regional Airport in Madison, and Green Bay Austin Strobel International Airport in Green Bay to gauge the decline in activity between the beginning of March and April 6, 2020. We compare these trends to broader national air traffic patterns and some international developments.
"The Economic Impact of COVID-19 on the Chinese Economy" by Chang Liu, April 6, 2020
The COVID-19 pandemic has now spread across the globe, causing significant economic disruption all over the world. China was the first and one of the hardest-hit countries in this global fight. The city of Wuhan, the first epicenter of this pandemic, with a population of 11 million, was completely shut down on Jan. 23, 2020, which WHO called “unprecedented in public health history”. Soon after that, cities in Hubei, of which Wuhan is the capital city, together with the rest of China, imposed similar lockdown restrictions, albeit less restrictive. Due to these quarantine regulations, by late February officially reported new cases of coronavirus had turned zero outside Hubei; in mid-March, total officially reported new domestic cases in mainland China turned to zero.
This fight, however, comes with substantial economic costs: businesses had to shut down, transportation scaled down, workers and consumers stuck at home and so on. With the spread of coronavirus under control, restrictions on businesses were gradually lifted throughout March.
In this report, I use the newly available data to investigate how the COVID-19 outbreak and the associated quarantine policies have affected the Chinese economy from various perspectives. Specifically, I look at the 8 groups of economic indicators covering production, investment, consumption/sales and imports and exports. Almost all of them indicate a plummet in economic activity where the year-over-year growth rate dropped from about 10% before the pandemic to -20% or lower in February 2020. Fortunately, the limited amount of data available for March indicates a rebound in economic activity, which suggests that the negative impact may be short-lived.
"Measuring Wisconsin Economic Activity Using Foot Traffic Data" by Noah Williams, latest update April 8, 2020
The COVID-19 pandemic is leading to unprecedented social and economic disruptions around the globe. The economies in many locations have ground to a halt, as social distancing measures to slow the spread of the virus have increasingly led to businesses being shut down and workers ordered to shelter in place. While there has been an immense reduction in economic activity, there have been relatively few measures of just how severe the impact has been.
In this brief I analyze a measure of economic activity using a new data source of foot-traffic in commercial locations. I focus on year-over-year same-location changes in the state of Wisconsin, and find that there has been roughly a 52% drop in overall activity during the last week of March 2020 compared to 2019. The declines have been even more severe in some industries, with 76% drops for hotels and 71% for restaurants. Grocery stores are the only retail sector seeing relatively strong activity, with activity off only 7%. While non-essential retail stores have closed, grocery stores have remained open and activity at certain times has spiked. With the closing of UW-Madison, the Madison metro area has seen an even larger 65% decline in activity. Activity has stabilized, at a low level, over the last two weeks.
"The effects of COVID-19 on Wisconsin’s workers and firms" by Kim Ruhl, latest update June 26, 2020
The “social distancing” required as part of the response to COVID-19 has created a sharp increase in Wisconsin workers seeking unemployment insurance. We focus on initial unemployment claims, which measure applications for benefits from workers who were not currently receiving benefits.
"Unemployment Benefits under the Federal COVID-19 Relief Package" by Noah Williams, March 27, 2020
As the COVID-19 pandemic has spread throughout the United States, it has led to mass shutdowns of businesses with many states being placed under shelter-in-place orders. This is leading to an unprecedented increase in unemployment, with initial unemployment claims hitting 3.3 million on the week of 3/21/20, which will likely increase in the coming weeks. To provide relief for these unemployed workers, the federal government is implementing an aid package which supplements state unemployment insurance benefits with an additional $600 per week in “Federal Pandemic Unemployment Compensation” through 7/31/2020.
This brief compares the unemployment benefits compensation through existing state systems and the new federal compensation to average weekly wages in each state. I find that maximum unemployment benefits would exceed 90% of average weekly wages in all states, with the ratio substantially higher in most states.
"The Geographic Distribution of Workers Most At Risk Economically When Ordered To Stay At Home" by Junjie Guo, March 26, 2020
On March 24, 2020, at the direction of Governor Tony Evers, Wisconsin issued a “safer at home” order requiring residents not to leave their home unless necessary. Similar orders to lock down the economy in an attempt to limit the spread of COVID-19 have been issued elsewhere. Different from many other countries like China, Italy and most recently the U.K., the federal government in the U.S. hasn’t issued such an order nationally, and President Trump recently expressed his willingness to move in the opposite direction and “have the country opened up … by Easter” after his direction of 15-day social distancing ends next week, a timeline that is dramatically sooner than what many public-health experts have recommended. Instead, some state and local governments have been issuing lockdown orders on their own. At the time of this writing (11:50 pm CST on 3/25/2020), 196 million Americans in 21 states, 37 counties and 16 cities are being urged to stay at home, according to a real-time tracker by the New York Times, which also noted that “A few states – Kentucky, Maryland and Nevada, for example – have walked up to the line, closing down all non-essential businesses but not issuing formal orders for people to stay home”.
"Forecasting Initial Unemployment Claims using Google Searches" by Noah Williams, March 23, 2020
Weekly Google search trends related to unemployment provide an accurate forecast of initial unemployment claims. For the current week (ending March 21), I forecast that US initial unemployment claims will top 1.6 million, which is roughly twice the previous record high.
"COVID-19, Industry Mix and the Growth of Initial UI Claims across States" by Junjie Guo, March 23, 2020
In its latest news release on unemployment insurance (UI) weekly claims, the U.S. Department of Labor (DOL) reported that, relative to the prior week, the number of initial claims increased significantly by 70,000 in the week ending on March 14, 2020. The report noted that the increase “are clearly attributable to impacts from the COVID-19 virus. A number of states specifically cited COVID-19 related layoffs, while many states reported increased layoffs in service related industries broadly and in the accommodation and food services industries specifically, as well as in the transportation and warehousing industry, whether COVID-19 was identified directly or not.”
We evaluate this assessment quantitatively.
"The Uneven Effects of Chinese Tariffs" by Kim Ruhl, November 12, 2019
As part of the escalating trade war, the Chinese government increased substantially the tariffs it levies on a range of products exported from the United States. Trade policy is applied at a national level—a good entering China from the United States is tariffed the same regardless of where it was produced within the United States. The United States, however, is geographically diverse and the effects of the Chinese tariffs fall unevenly on different parts of the country. In early 2018, the United States levied tariffs against solar panels, washing machines, steel and Aluminum—beginning the ongoing trade war.
"The Dodd-Frank Act and Small Bank Creation", by Kim Ruhl, May 15, 2019
In the aftermath of the financial crisis, Congress passed the Dodd-Frank Act which increased capital requirements and regulation of banks. Following the Act, there has been a reduction in the creation of small banks, who have faced a large burden under the Act. Small banking is most important in poorer, rural areas, which suggests that these areas would be most affected by changes in the health of the small-bank sector.