1 1 (July 30, 2020)

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               Researh Sevice





Economic Activity and the Expiration of

COVID-19 Relief Provisions



July 30, 2020
The federal response to the Coronavirus Disease 2019 (COVID-19) crisis has included programs
providing economic relief to individuals, businesses, and state and local governments. The recent or
looming expiration or exhaustion of several of these programs has generated congressional discussions on
the effect that this could have on the U.S. economy's short- and long-term performance. This Insight
briefly summarizes the current economic recession and fiscal policy response, highlights some programs
that are near expiration or exhaustion of funding, and discusses underlying economic issues.

Recession Characteristics
The COVID-19 crisis generated a sudden and severe decline in economic activity. The national
unemployment rate rose from 3.5% in February 2020, the last month before the declaration of a national
emergencv under the StaffordAct, to 14.7% in April 2020, the highest monthly rate recorded by the
Bureau of Labor Statistics (dating back to 1948). The advance estimate from the Bureau of Economic
Analysis (BEA) estimated that real GDP declined at an annual rate of 32.9% in the second quarter of
2020, which is larger than any single quarterly change in real GDP measured by the BEA (dating back to
1947).
Both supply-side and demand-side issues are contributing to the current economic decline. Social
distancing measures have resulted in many businesses not being able to supply goods and services at the
same level or in the same manner as prior to the pandemic. Fears about the virus and uncertainty about
future economic conditions have also led to high savings rates and low consumption and investment. That
this decline is rooted in a public health crisis has generated much uncertainty in predicting the path of the
recession and subsequent recovery. An eventual arrival of a vaccine and easing of public health concerns
may lead to a quick recovery relative to the experience in other recessions. The size of the economic
decline, however, indicates that even a relatively brief dec line may have lasting financial effects on
households and businesses.





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