Short-term U.S. Economic Impacts of the Novel Coronavirus

Closure of All Non-Life-Sustaining Industries

States have begun suspending the physical operations of many economic sectors in hopes of decelerating the spread of the novel coronavirus. Using sector-specific guidance from Pennsylvania, FTI Consulting (“FTI”) forecasted the economic impacts if all states were to pursue similar guidance. Under this scenario, FTI Consulting estimates 65.4 million workers, or 33% of all U.S. workers, would have their jobs suspended in 2020 Q2. The impact to GDP would be $1.18 trillion, which amounts to 5.7% of annual GDP or an annualized decline of 22.9%, in line with others forecasting a 12% to 30% annualized decline.

States such as California, Connecticut, Florida, Nevada, New Jersey, New York, and Pennsylvania have begun suspending the physical operations of many economic sectors in hopes of decelerating the spread of the novel coronavirus. Pennsylvania recently issued a detailed list of economic sectors¹ that can or cannot stay open based on whether they are “life-sustaining businesses.” These businesses include agriculture and natural resources, food and fuel production and distribution, utilities, certain key manufacturing and communications sectors, insurance, and healthcare services.

FTI Consulting examined the direct, short-term (3-month) economic activity at-risk if all states were to adopt similar guidance to that of Pennsylvania.² Roughly 65.4 million jobs at non-life-sustaining businesses – or 33% of all U.S. jobs – would be suspended with the strongest impacts in the retail sector, construction, and food service.³

Footnotes:

1: https://www.inquirer.com/health/coronavirus/spl/pennsylvania-coronavirus-list-life-sustaining-businesses-shutdown-order-20200319.html

2: We assumed certain economic sectors, even if deemed non-life-sustaining business, can continue to operate. These include professionals working from home at 75% capacity in sectors such as information, finance, real estate, professional services, education, some types of personal services, and government. We also assumed that food service continues to operate at 50% capacity through takeout orders and arts and entertainment continues to operate at 25% capacity through the Internet.

3: We expect minimal impacts to sectors such as agriculture and natural resources, fossil fuel extraction, utilities, and wholesale trade.