Research / BFI Working PaperJan 10, 2021

Pandemic-Era Uncertainty on Main Street and Wall Street

Brent Meyer, Emil Mihaylov, Steven J. Davis, Nicholas Parker, David Altig, Jose Maria Barrero, Nicholas Bloom

We draw on the monthly Survey of Business Uncertainty (SBU) to make three observations about pandemic-era uncertainty in the U.S. economy. First, equity market traders and executives of nonfinancial firms share similar assessments about uncertainty at one-year look- ahead horizons. That is, the one-year VIX has moved similarly to our survey-based measure of (average) firm-level subjective uncertainty at one-year forecast horizons. Second, looking within the distribution of beliefs in the SBU reveals that firm-level expectations shifted towards upside risk in the latter part of 2020. In this sense, decision makers in nonfinancial businesses share some of the optimism that seems manifest in equity markets. Third, and despite the positive shift in tail risks, overall uncertainty continues to substantially dampen capital spending plans, pointing to a source of weak growth in potential GDP.

More Research From These Scholars

White Paper Jun 16, 2020

The Unprecedented Stock Market Reaction to COVID-19

Scott R. Baker, Nicholas Bloom, Steven J. Davis, Kyle Kost, Marco Sammon, Tasaneeya Viratyosin
Topics:  Financial Markets, COVID-19
BFI Working Paper Jun 29, 2020

Economic Uncertainty Before and During the COVID-19 Pandemic

Dave Altig, Scott Baker, Jose Maria Barrero, Nick Bloom, Phil Bunn, Scarlet Chen, Steven J. Davis, Brent Meyer, Emil Mihaylov, Paul Mizen, Nick Parker, Thomas Renault, Pawel Smietanka, Greg Thwaites
Topics:  COVID-19
BFI Working Paper Sep 18, 2020

60 Million Fewer Commuting Hours Per Day: How Americans Use Time Saved by Working from Home

Jose Maria Barrero, Nick Bloom, Steven J. Davis
Topics:  Employment & Wages, COVID-19