US policy makers have taken extraordinary measures to keep citizens and the economy healthy during the COVID-19 epidemic, including quickly implementing the most expensive economic stimulus in the country’s history. Yet a survey suggests that none of this effort—not the health advisories, lockdown orders, payouts to households, nor interest-rate manipulations—made the American public feel much more optimistic about their own futures or the economy at large.
Facts about COVID-19 and news about related policies this past spring did not significantly change workers’ level of concern about losing jobs, suggests the study by University of Texas’s Olivier Coibion, University of California at Berkeley’s Yuriy Gorodnichenko, and Chicago Booth’s Michael Weber.
The researchers administered the survey in April 2020, when much of the nation was under lockdown orders aimed at preventing the spread of COVID-19. The participants were a subset of households in the Nielsen Homescan panel, which consists of roughly 85,000 households nationwide that track their daily spending. Participants were given different combinations of information about the severity of the pandemic and the various policy responses both before and after answering questions about their expectations for income and spending.
Unemployed workers, when told of ongoing actions by the Federal Reserve, Congress, and the Centers for Disease Control and Prevention, became less optimistic about landing a job.
Meanwhile, Fed promises to depress interest rates did not materially change people’s spending plans. Households were no more or less likely to buy cars, large appliances, or houses after hearing of the new monetary policy, the research finds.
Even the stimulus checks that likely benefited most of the survey’s 13,771 participants did little to sway economic expectations. Households, the researchers write, “do not view this policy as having a materially important effect on their expected income growth.”
Respondents generally thought that COVID-19 was much more contagious and deadly than CDC advisories have stated, the research finds. But being presented the facts did little to change their expectations about their own income, the unemployment rate, mortgage rates, or inflation over the next 12 months.