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Recovering from COVID

James H. Stock & Mark W. Watson

Brookings Papers on Economic Activity2025https://doi.org/10.1353/eca.2025.a978550article
AJG 3ABDC A
Weight
0.50

Abstract

ABSTRACT: The COVID business cycle was unique. The recession was by far the deepest and shortest in the US postwar record and the recovery was remarkably rapid. The cycle saw an unprecedented reallocation of employment and consumption away from in-person services toward goods that can be consumed at home and outdoors. This paper provides a simple empirical model that attributes these and other anomalies in real economic activity to a single unobserved shock. That shock is closely connected to COVID deaths and diminishes in importance over the expansion, consistent with self-protective measures like masking, pandemic fatigue, and eventually the availability of the vaccine. The COVID shock and anomalous COVID dynamics largely disappeared by late 2022. It appears that macrodynamics have returned to normal and that the structural shifts wrought by the COVID-19 pandemic have had limited effects on the underlying economic trends of key indicators, despite notable changes like the prevalence of remote work. The greatest macroeconomic legacy of the COVID business cycle has been on the national debt.

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https://doi.org/https://doi.org/10.1353/eca.2025.a978550

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@article{james2025,
  title        = {{Recovering from COVID}},
  author       = {James H. Stock & Mark W. Watson},
  journal      = {Brookings Papers on Economic Activity},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1353/eca.2025.a978550},
}

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Recovering from COVID

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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