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* Tribune editorial board…
It’s clear that policy adjustments are not enough to breathe vigor back into the economy. “The virus is the boss,”says Austan Goolsbee, an economist at the University of Chicago’s Booth School of Business. A study he conducted with colleague Chad Syverson found that state and local shutdown orders were not the main reason for the plunge in consumer traffic to stores and other businesses.
“The vast majority of the decline was due to consumers choosing of their own volition to avoid commercial activity,” they write. And the more COVID-19 deaths occurred in a given county, the bigger the decline.
Governors and mayors obviously need to strive to tailor rules to local conditions and make them no tighter than necessary. But if they ease up too much, fueling the pandemic, they are likely to scare consumers into staying home and curbing their expenditures, at a high cost in sales and jobs.
The pandemic will be a serious obstacle to economic recovery until we get a vaccine, cheap mass testing or extensive contact tracing, if not all three. A lot of businesses that thrived before won’t survive, and businesses geared to the changed commercial landscape won’t sprout up immediately.
* From the study’s abstract…
The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that collapse resulted from government-imposed restrictions on activity versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the economic slowdown using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior over the crisis within the same commuting zones but across state and county boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the massive changes to consumer behavior (and that tracking county-level policy conditions is significantly more accurate than using state-level policies alone). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 percentage points of this. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly influenced by the number of COVID deaths reported in the county; and showed a clear shift by consumers away from busier, more crowded stores toward smaller, less busy stores in the same industry. States that repealed their shutdown orders saw symmetric, modest recoveries in activity, further supporting the small estimated effect of policy. Although the shutdown orders had little aggregate impact, they did have a significant effect in reallocating consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.
The full paper is here.
posted by Rich Miller
Tuesday, Jul 7, 20 @ 9:18 am
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Most conservatives refuse to accept a new reality until it affects them personally.
The Trib editorial board must have finally been affected by this personally.
Comment by efudd Tuesday, Jul 7, 20 @ 9:25 am
I wonder if Darren Bailey et al will read this report? Probably not.
I find the information fascinating, and somewhat of a rebuke to those that criticized the governor (especially those displaying “Pritzker Sucks” signs). If the report is to be believed many took the initiative to stay away from crowds.
Now if everyone who can would wear a mask…
Comment by JS Mill Tuesday, Jul 7, 20 @ 9:26 am
I did modify my activities. I’ll golf; its outside and I can social distance. But, I’m going to cancel my gym membership until there is a proven vaccine. Essentially I have curbed my spending habits. I eat less frequently out, but when I do I tip at a 25% rate.
Comment by the Edge Tuesday, Jul 7, 20 @ 9:33 am
Interesting report. A vindication of the governor in some ways as people began to stay at home and distance before he ordered it to happen.
Those suing the state should be required to read the report.
Comment by JS Mill Tuesday, Jul 7, 20 @ 9:36 am
I have seen surveys that office use will be permanently down due to success of work from home. And shop from home.
Also I wonder if we are in phase 3.5 because everyone is watching FL AZ TX in horror.
Comment by Not a Billionaire Tuesday, Jul 7, 20 @ 9:39 am
“ ‘The vast majority of the decline was due to consumers choosing of their own volition to avoid commercial activity,’ they write. And the more COVID-19 deaths occurred in a given county, the bigger the decline.”
It shouldn’t have taken months, thousands of deaths, and increases in co-morbidities of survivors, to have come to this conclusion.
Comment by Anon221 Tuesday, Jul 7, 20 @ 9:40 am
There is no secret to managing through this. Other countries have been able to get things under control and begin rebuilding their economies. It requires consistent leadership and organization. Nothing more. People will resume their normal activities when it “feels” safe. Right now it doesn’t. Sure there will be a minority who refuses to abide by the rules but it’s not enough to save or build the economy off of.
Comment by Pundent Tuesday, Jul 7, 20 @ 9:40 am
We began isolating as much as possible on March 9, and we continue to do so. We knew that the federal government was going to be a disaster in and of itself, and we weren’t going to be able to rely on governmental information or support. Illinois government is doing much better, but the mask mandate really needs some teeth as a law. But I’m more upset at the ignorant fools that aren’t wearing masks. I’ve resorted to carrying a spray bottle of rubbing alcohol in case someone without a mask won’t back off so I can spray the air between us.
Comment by RIJ Tuesday, Jul 7, 20 @ 9:53 am
In Illinois our progress against the virus seems to show how serious it is being taken by so many people, from the governor to the residents. This is apparently not the case in states where infection rates are skyrocketing, where governors set a terrible tone and many residents do not take precautions. The president sets a terrible example, giving signals that it’s okay to risk lives and health by not wearing masks and socially distancing.
Comment by Grandson of Man Tuesday, Jul 7, 20 @ 9:53 am
I noted early on that no government agency forced the NCAA to cancel the tournament or the NHL and NBA to postpone their seasons. It is good to see this study from researchers at a credible University which expands upon those facts.
Comment by Proud Sucker Tuesday, Jul 7, 20 @ 10:01 am
I think what a lot of people are missing is that, according to the National Bureau of Economic Research, we slipped into this current recession back in February. Almost a month before we had out first COVID-19 death.
Comment by Gruntled University Employee Tuesday, Jul 7, 20 @ 10:17 am
Why are Chicago’s beaches closed but bars open?
https://mobile.twitter.com/mickeyd1971/status/1280227217243607045
Comment by hisgirlfriday Tuesday, Jul 7, 20 @ 10:20 am
Also I wonder if we are in phase 3.5 because “everyone is watching FL AZ TX in horror.”
I certainly am.
Comment by Skeptic Tuesday, Jul 7, 20 @ 10:25 am
What concerns me is your odds of seeing a customer in the Anna Kroger sans mask is 50/50, Anna Walmart 2 out of 3.
Too many people down here still think this is a “city” problem.
Comment by efudd Tuesday, Jul 7, 20 @ 10:28 am
“The vast majority of the decline was due to consumers choosing of their own volition to avoid commercial activity.”
Our household has been locked-down for 117 days.
Although the people who are taking this seriously have improved their behavior over the course of the last four months, the behavior of the people who don’t take this seriously has actually gotten much, much worse.
Half the people doing the right thing isn’t good enough. 90% of the people doing the right thing isn’t good enough. It just takes one person behaving deliberately recklessly to put me, and by extension my family, in danger.
So until there is a medical solution, our “commercial activity” will remain minimized.
– MrJM
Comment by @misterjayem Tuesday, Jul 7, 20 @ 10:49 am
@”- efudd - Tuesday, Jul 7, 20 @ 10:28 am:
What concerns me is your odds of seeing a customer in the Anna Kroger sans mask is 50/50, Anna Walmart 2 out of 3.
Too many people down here still think this is a “city” problem.”
Just a week ago here in Springfield, in one of our Walmarts, over one half-dozen employees, and at least one third of customers were maskless.
My family will not be returning to any Walmart until they get their act together or effective vaccine/treatment becomes available.
Comment by Hieronymus Tuesday, Jul 7, 20 @ 11:18 am
We’ve avoided crowds from day one of the lockdown. The local nursing homes had breakouts of COVID. It went home to spouses and family. Now I see for sale signs on main street. I don’t think the businesses will sell for much value until this is over. The social distancing has worked, but the costs are high. Our small town won’t look the same after this is over. The governor doesn’t acknowledge the extent of damage to small business. No plan! No money. Yet people wonder why the signs exist.
Comment by Rural Survivor Tuesday, Jul 7, 20 @ 11:23 am
Home is still where the smart people stay…despite the okeedokee hype…designed to get us to risk lives for dollars.
Capitalism is a ruthless design…beware.
Comment by Dotnonymous Tuesday, Jul 7, 20 @ 11:24 am
“The virus is the boss”…should be tattooed on the foreheads of mask refusenics.
Comment by Dotnonymous Tuesday, Jul 7, 20 @ 11:34 am
efudd@10:28 I saw the Union County Stats as posted in the Gazette-Democrat a few minutes ago. It looks like a significant number of people in Union County have contacted the disease, and yet ignore basic precautions.
Comment by Old Sarge Tuesday, Jul 7, 20 @ 3:54 pm
The same was true with the 1918 Flu… MIT and others published white papers on the Economic Impact of the 1918 flu earlier this year.
All this stuff was known for over a century and yet people are still demanding to re-open too early.
And for those who say “But how will people make money if they can’t work”…. well, maybe the Covid Relief Packages should focus on people out of work rather than keeping business bank accounts flush with cash.
Comment by The Other Rich Hill Tuesday, Jul 7, 20 @ 5:28 pm
Here is that MIT report on the Economics of the 1918 Flu; published way back on March 31…
Doesn’t seem like the “Big Business/Re-Open Everything” politicians read it.
The data speak: Stronger pandemic response yields better economic recovery
Study of 1918 flu pandemic shows U.S. cities that responded more aggressively in health terms also had better economic rebounds.
Peter Dizikes | MIT News Office
March 31, 2020
http://news.mit.edu/2020/pandemic-health-response-economic-recovery-0401
Comment by The Other Rich Hill Tuesday, Jul 7, 20 @ 5:32 pm
Multiple re-opened stores in Bloomington had to close over the weekend due to sick employees. They had signs saying they require masks, but they didn’t enforce it, and half the shoppers weren’t wearing masks.
Comment by LastOneIn Tuesday, Jul 7, 20 @ 7:18 pm