Government Orders Alone Didn’t Close the Economy. They Probably Can’t Reopen It.

Data shows there was a drop in spending and working even before any official mandates to stay at home.



In the weeks before states around the country issued lockdown orders this spring, Americans were already hunkering down. They were spending less, traveling less, dining out less. Small businesses were already cutting employment. Some were even closing shop.

People were behaving this way — effectively winding down the economy — before the government told them to. And that pattern, apparent in a range of data looking back over the past two months, suggests in the weeks ahead that official pronouncements will have limited power to open the economy back up.

In some states that have already begun that process, like Georgia, South Carolina, Oklahoma and Alaska, the same daily economic data shows only meager signs so far that businesses, workers and consumers have returned to their old routines.

Change in economic measures before, during and after state closures


Note: Change shown from Jan. 2020.·Source: Raj Chetty, John Friedman, Nathaniel Hendren and Michael Stepner, Opportunity Insights· The New York Times


Georgia, for example, began to reopen in waves starting April 24, first with gyms, salons and tattoo parlors, and several days later with dine-in restaurants and movie theaters. But the share of small businesses operating and the hours worked in them budged little through the following week, according to data from companies that help firms manage business and track payrolls, or that aggregate credit card transactions. The share of small businesses open remained down about 30 percent from January.


“There’s just no evidence that this partial reopening in Georgia has significantly changed anything in the economy,” said John Friedman, an economist at Brown University and a co-director of Opportunity Insights, a Harvard-based organization that is publicly tracking economic data on the crisis from a number of private companies. Consumer spending data in Georgia has fluctuated up and down, but moving averages of the metric have remained about the same.

Consumer spending data gathered by the project has not fallen as far as other measures of the health of the economy, partly thanks to tax refunds and federal stimulus checks that helped prop up spending in April. But daily measures of employment and store closings, particularly for small businesses, fell precipitously through March and have remained low.

Even in states that imposed stay-at-home orders or closed nonessential businesses relatively early, households and businesses had begun to shift their behavior about 10 days before those orders. In states that closed later, that shift had come about 20 days earlier.

Change in economic measures by timing of state closures

Note: Change shown from Jan. 2020. “Early closing states” include 14 states that issued stay-at-home orders and non-essential business closures during the week of March 19. “Late closing states” includes 14 states that issued some type of statewide order after March 26. In the eight states with no stay-at-home order statewide, other restrictions were in place.·Source: Raj Chetty, John Friedman, Nathaniel Hendren and Michael Stepner, Opportunity Insights· The New York Times