THE CORONAVIRUS RECESSION IN THE U.S.: IS THERE A LONG-RUN FOOTPRINT?

Abstract

The U.S. coronavirus recession began in late February of 2020 and was over in two months. The rapid recovery was due to the Coronavirus Aid, Relief, and Economic Stability Act (CARES Act), a large fiscal stimulus program initiated in late March 2020, that was accompanied by a strong expansionary monetary policy. This paper advances the notion that although the Corona-Recession was historically short it had two more permanent—longer-run—impacts that have largely been ignored. First, it accelerated two emerging trends—expansion of remote work, and more rapid adoption of digital technologies—and each will have a profound effect on work, society, and well-being in the U.S. Second, the pandemic-fuelled downturn fostered a new pathway—loneliness and social isolation—that exacerbated the emotional health concern that is part of all recessions, especially for younger persons. This occurrence is also likely to have an enduring footprint on economic and social life.