The Current State of Affairs
As COVID-19 continues to spread across the globe with over 750,000 cases globally, Premise has continued to monitor sentiment, especially in the United States, which now has the most confirmed cases of any single country. (Over 205,000 cases and counting.) In the face of this spread, state and local governments across America are gradually turning to stronger measures to slow the virus’ spread with efforts centered around social distancing, the act of creating physical distance between people to lower the chance of transmission. Many jurisdictions in America are turning to ‘shelter-in-place’ orders, which are designed to keep citizens at home except for essential trips like going to the grocery store or hospital in an attempt to limit social contact among the wider population. Major cities like San Francisco and New York City are effectively shut down, with normally bustling tourist areas completely vacant.
The continued spread of COVID-19, combined with such unprecedented restrictions, has had a devastating effect on the U.S. economy. The stock markets have lost almost 30% of their value from peaks in mid-February, and three million people applied for unemployment insurance in the week of March 16 alone (obliterating the previous single-week record of 695,000). In response to these and other developments, Congress passed the largest economic stimulus in history valued at $2 trillion.
In the midst of all this activity, Premise has been tracking the economic impact of coronavirus on the United States since March 2nd with a survey in the field collecting information about our Contributors’ sentiments. To date, over 23,000 responses have been collected regarding the economic impact on the U.S., the highlights of which are presented below.
For this snapshot, we chose to begin with a question that will be relevant for months as the United States fights off COVID-19 and rebuilds its economy. We asked our Contributors, “What is your level of agreement with the statement: ‘The economy will get worse before it gets better,’” and used a simple three-day moving average to calculate the percentage of Contributors who either picked “agree” or “strongly agree.”
This simple question can provide key insight into the population’s perception of the economy and preview where it might go. When people’s faith in the prospects of the wider economy is shaken, it often manifests itself through concrete economic impacts like layoffs, foreclosures, reduced consumer spending, and drops in the stock market.
A Tale of Two Regions – West Coast/South
Due to the uneven spread of COVID-19, uneven federal response and current political climate, states have largely plotted their own course in dealing with the pandemic. Premise wanted to investigate how different approaches by different states might affect our Contributors’ perceptions of the economic impact of COVID-19. To assess these perceptions, we chose two regions with different approaches to the crisis – the West Coast (California, Oregon, California), and a portion of the South (Florida, Georgia, Alabama).
As of this writing, these regions are suffering similarly—the West Coast has 10,727 confirmed cases, while the three southern states of interest have 9,104 cases. However, the paths pursued by the state governments in these regions have been quite different. Being some of the first states severely affected by COVID-19, California, Oregon, and Washington were also among the first to issue statewide “shelter-in-place” orders—all three had such an order in place by March 23rd. In contrast, as of March 30th, neither Florida, Alabama nor Georgia had statewide restrictions in place, instead deferring to local jurisdictions to make decisions regarding ‘shelter-in-place’ orders.
When examining our data, we found a clear difference in our Contributors’ perceptions of the economy between these two regions. Figure 2 below shows that throughout much of March, West Coast respondents were more concerned about the state of the economy than their counterparts in Florida, Georgia and Alabama. In fact, using statistical analysis, Premise can say with 95% confidence that in the final three weeks of March, people on the West Coast were consistently more concerned the economy will get worse before it gets better; whereas at no point do a majority of people in Florida, Georgia or Alabama combined think the economy will get worse before it gets better.
As COVID-19 expanded on the West Coast in early March and people began to practice social distancing, the effects of coronavirus on the economy were beginning to be felt, which might explain the high level of concern West Coast residents had about the economy. Events were being canceled and restaurants were closing for the foreseeable future, whereas in the southern states, which had fewer cases and fewer restrictions in place at the time, people remained more confident about the economy. Then during the second week of March, there was a cascade of events (noted in the shaded zone on the plot) that likely prompted Contributors on both sides of the country to become more pessimistic about the economy’s immediate future. Nevertheless, by the end of March, Figure 2 shows that pessimism towards the state of the economy had increased on both the West Coast and in the three southern states, closing the collection period with the exact same level of concern despite the differences in approach and reported behavior.
Below is a GIF displaying the three-day moving averages of how many people in each of the three southern states and the West Coast states agreed with the statement “Will The Economy Get Worse Before It Gets Better.” The trend of increasing worry about the economy over time can clearly be seen within each state in both GIFs.
In addition to economic pessimism, stockpiling/panic-buying has been occurring nationwide, creating shortages of necessary products like produce, toilet paper and prepared goods. To quantify this trend, Premise asked Contributors if they had witnessed supply shortages yet. The time trend data depicted in Figure 3 below corroborates the West Coast respondents’ higher level of concern, providing evidence that there was more stockpiling/panic-buying there than in the three southern states throughout March. In conjunction with the Figure 2 results, it is not surprising that supply shortages were observed earlier and more intensely on the West Coast since COVID-19 hit there earlier than in the southern states where the disease is only now taking off. Similar to Figure 2, there was a jump in supply shortages in both the West Coast and those southern states during the same turbulent shaded period in the second week of March.
As can be seen in Figure 3, the spatial responses to the supply shortages question almost exactly mirror those of the economic question in Figure 2—consistently, Contributors on the West Coast observed supply shortages both in a greater quantity and earlier than those in the three southern states. We suspect this is due to a number of factors, such as the differing responses by political leadership, local culture and the virus first appearing in significant scope on the West Coast. Interestingly, however, both regions appear to have responded strongly to the tumultuous second week of March with stockpiling/panic-buying as observed in the rapid increase in observed supply shortages.
Conclusions and Next Steps
It can be seen that despite different choices by political leadership and different experiences in the timing of COVID-19 infections, both regions have responded similarly in the data, with the southern states lagging by only a few days, though people on the West Coast have consistently been both more worried about the economy and witnessed more supply shortages. Both regions responded strongly and immediately to the rash of negative headlines during the second week of March with a sharp increase in both observed supply shortages and the feeling that the economy will get worse before it gets better. These correlated sentiments and behaviors could be a cause for concern if they continue to intensify in the coming weeks and months. Prolonged skepticism over the economy, along with an inability to get goods—as well as a potential rise in the number of layoffs, furloughs or other downturns in the number of hours worked—could lead to dramatic economic impacts in the U.S. and abroad.
Premise will continue to gather information on these (and other) economic impacts tied to COVID-19, tracking the attitudes towards the state of the economy and governmental responses, to see what effect it has on our Contributors’ sentiments and behaviors.
You can visit www.premise.com/COVID-19 to learn more about the data we are collecting about this global pandemic.