Expert available to discuss how economic impact of COVID-19 may vary across the country

Expert available to discuss how economic impact of COVID-19 may vary across the country Expert available to discuss how economic impact of COVID-19 may vary across the country

March 18, 20202 min read

Retailers such as Macy’s, Nordstrom and Urban Outfitters have announced they will temporarily shutter stores and car maker Honda will close six U.S. plants for a week. Earlier, in-person service at restaurants and bars was ceased. R. Andrew Butters, assistant professor of business economics and public policy at the Indiana University Kelley School of Business, cautions against making general assessments about COVID-19’s economic impact across the country.


“Assessing the economic impacts of this pandemic -- and the range of policy responses enacted -- or being considered; however, might be harder to predict and have the potential to be even more uneven. For instance, take the most recent response of closing in-person dining at bars, and restaurants after the first confirmed death in Indiana was announced on Monday.


Citing the of example restaurants, “According to the most recent economic census data, on the dimension of annual sales per capita coming from restaurants and other eating establishments, the state of Indiana is less dependent on this sector of the economy than other neighboring states Illinois and Ohio, that have enacted similar responses. On this particular dimension, one could view the economy of Indiana being somewhat insulated relative to its Midwest neighbors.


“In sectors like airline travel and hotels, net bookings are down across the board -- and at unprecedented levels. How long travelers stay at home will have a lasting impact on the distribution of foregone revenues experienced at restaurants, bars, and hotels across the country.


“An empty seat, or hotel room, contributes zero to GDP. This is especially true in a country like the US, as the demands for air travel and lodging vary across different parts of the country. Some areas of the country with peaks in demand over the spring months (e.g. Arizona and Florida) are likely to be especially vulnerable. Other areas with peaks in travel and recreational demand later in the year, (e.g., some areas of New York and Minnesota) might be less impacted, if the health concerns of travel are mitigated over the next couple of months.


“There are many factors one can point to as contributors to a sharp rebound in economic activity, after the impact of the health concerns of the virus are subdued. These factors include the current personal savings and unemployment rates. As more varied -- and reflective -- economic and financial data comes in from areas affected by the global supply chain/consumption disruptions created by this virus (see, e.g., Brave-Butters-Kelley Business Cycle Indices and National Financial Conditions Index), it will be imperative that public policy makers work in concert with the most recent assessments of the depth and duration of this crisis to ensure the stabilization of local and national economies.”


Butters can be reached at 812-855-5768 (o), 630-699-4868 and 

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  • R. Andrew Butters
    R. Andrew Butters Assistant Professor of Business Economics and Public Policy

    R. Andrew Butters is an expert in the areas of industrial organization, productivity, market integration, demand and business cycles.

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