Economic impacts of the COVID-19 pandemic: State perspectives

Hewings, Geoffrey; Kriz, Kenneth A.; Merriman, David F.

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https://hdl.handle.net/2142/109825 Copy

Description

Title

Economic impacts of the COVID-19 pandemic: State perspectives

Author(s)

• Hewings, Geoffrey
• Kriz, Kenneth A.
• Merriman, David F.

Issue Date

2020-05-27

Keyword(s)

• Direct and Indirect Job Loss
• Econometric-Input-Output Model
• Illinois Economy

Abstract

Analysis of the impact of the COVID-19 Pandemic on the state of Illinois’ economy, using an annual econometric-input-output model, revealed that even though the initial or direct impacts were concentrated in three sectors, Construction, Trade and Transportation and Hotel and Leisure Activities, the indirect effects were felt throughout the economy. The multiplier or ripple effects from the loss of jobs in the three most affected sectors penetrated throughout the state as a result of losses of purchases on inputs from other sectors (the value-chain effect) and, most critically, from the loss of wages and salaries. The negative income effect resulted in decreases in total consumption, as well as significant re-allocations of consumption to more grocery expenditures (with a concomitant decrease in, for example, restaurant purchases) and especially a pronounced decrease in the purchase of durable goods as households became more risk adverse. An estimated initial loss of 400,000 direct jobs would lead to a further indirect loss of 150,000 jobs for a total loss of 550,000 jobs. Given the significant degree of interconnectedness of sectors in the Illinois economy, recovery is likely to take time as many of the directly affected sectors are associated with expenditures made by business and tourist visitors to the state; with travel restrictions in place, as well as limitations on dining and cultural activities (many of which have been cancelled), the external economic stimuli will remain at low levels.

Type of Resource

text

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http://hdl.handle.net/2142/109825

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