What can past pandemics teach economists about COVID-19?
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Economists are weighing in already with newly-published papers trying to better understand what the COVID-19 pandemic might do — to everything: investment returns, wages, working from home.
The research focuses on the economic history of pandemics. Economists are taking their models, trying to adapt them for additional insights during these times and using things like online surveys and Facebook activity to capture emerging trends.
Pandemics have had powerful economic effects through the ages. What sticks out as these economists survey the past?
One paper from the Federal Reserve Bank of San Francisco looks at the longer run economic consequences of pandemics. These scholars included in their study 15 major pandemics.
The takeaways? The death toll from pandemics: horrible. The economy takes a huge hit, of course.
“But they found that the long run economic results, they are somewhat more mixed,” Marketplace senior economics contributor Chris Farrell told “Marketplace Morning Report” host David Brancaccio. “And the effects, the reverberations, last for about 40 years, on average.”
For example, the inflation-adjusted rates of return on assets — so the real return on assets — were substantially depressed.
However, inflation-adjusted wages gradually increase. There could be a number of reasons behind that, but it’s probably because labor is scarce. That is, people are sick or people have died from disease, and that’s an awful way to squeeze the labor supply so that wages go up.
As far as social media goes and its usefulness as a gauge for what’s happening in real time, MIT researchers took a look at how many people have been able to successfully transition to working from home.
“One of the big divides in society right now is between people who can earn an income by working remotely at home and those who can’t,” Farrell said. “So there’s this MIT online survey, and they looked into teleworking. The survey ran from April 1 to April 5, 25,000 responses.”
“What they found is that of those employed four weeks earlier, more than one-third had converted from commuting to working from home. So if you take it all together, nearly half their survey sample is working from home.”
Click the audio player above to hear the full interview.
COVID-19 Economy FAQs
New COVID-19 cases and deaths in the U.S. are on the rise. How are Americans reacting?
Johns Hopkins University reports the seven-day average of new cases hit 68,767 on Sunday — a record — eclipsing the previous record hit in late July during the second, summer wave of infection. A funny thing is happening with consumers though: Even as COVID-19 cases rise, Americans don’t appear to be shying away from stepping indoors to shop or eat or exercise. Morning Consult asked consumers how comfortable they feel going out to eat, to the shopping mall or on a vacation. And their willingness has been rising. Surveys find consumers’ attitudes vary by age and income, and by political affiliation, said Chris Jackson, who heads up polling at Ipsos.
How many people are flying? Has traveled picked up?
Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
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