Economic Growth Initiative

Seven Forces Reshaping the Economy Amid and Beyond COVID-19

Seven Forces Reshaping the Economy

During the last six months, the COVID-19 pandemic has turned how we live upside down — driving fundamental shifts in how and where we work, learn, shop, live and seek medical care. With these changes come winners and losers, and it is increasingly important for business and government leaders to understand this economic transformation in order to take advantage of new opportunities and assist those who have been, and will continue to be, economically dislocated through no fault of their own.

To help understand the opportunities for long-term change that will bring better economic outcomes for more people, the Kenan Institute has collaborated with the North Carolina CEO Leadership Forum to produce a new report, Seven Forces Reshaping the Economy.

Below, you may access the full report, a supplemental report offering additional insights specific to the state of North Carolina, and a policy brief.


Opportunities for
North Carolina

North Carolina
Policy Brief

Seven Forces Policy Brief

Our Position

Economic activity is the lifeblood of American well-being

While necessary to slow the spread of the COVID-19 virus, the numerous state-mandated lockdowns have exacted a significant toll on many American households. Going forward, policymakers are tasked with navigating an economic reopening. As with many other challenging policy choices characterized by difficult tradeoffs, the reopening should be viewed within a cost-benefit framework. Rather than appeal to the superficial and politically charged “lives vs. livelihood” language employed elsewhere, we propose that the set of tradeoffs faced by policymakers is far more nuanced. If the sole policy objective were to limit the virus spread, a lockdown would be a remarkably effective tool. However, other considerations must be made. Reopening decisions must adhere to an evidence-based process that holistically internalizes the spectrum of healthcare and economic costs and permits informed risk-taking.

Although much of the conversation has centered on the economic costs of the lockdown, the indirect healthcare costs of the shutdown are also significant. For example, we do not yet know the long-run consequences of unattended ailments, but currently more than a third (42 percent) of the U.S. population reports delaying a healthcare procedure or doctor visit because of the pandemic.1 Second, we are learning about the psychological costs associated with elevated cases of anxiety, depression, and physical and emotional abuse. Nearly a quarter (24 percent) of Americans currently report experiencing moderate or severe anxiety or depression.2 Third, the explosion in unemployment will detach millions of workers from much-needed health insurance at precisely the moment when access to healthcare is critical.3 Finally, there are monumental costs that flow through directly to the viability of our complex healthcare system. In the face of limited elective procedures central to revenue generation, hospital budgets are dire.4 This comes as many, especially rural, hospitals already risk closure from financial pressures.5

Reopening decisions must adhere to an evidence-based process that holistically internalizes the spectrum of healthcare and economic costs and permits informed risk-taking.

In addition to notable healthcare implications, the economic costs of the lockdown are and should be under serious consideration. This is not a superficial partisan statement or an invitation to ponder asset wealth; instead, at the level of the typical American household, there are serious long-run consequences associated with worker dislocation. Workers laid off during a crisis or recession such as the current pandemic do not simply lose their jobs. More distressingly, they suffer persistent earnings losses in addition to a host of other negative consequences, including elevated rates of food insecurity, divorce, depression and anxiety, diminished physical health and a lower rate of educational attainment for their children.6 This has the potential to seriously exacerbate the already rapidly growing problem of “deaths of despair” linked to alcohol and opioids in the face of diminishing economic opportunity.7

Worse yet, despite the rhetorical notion that we “are all in this together,” the frustrating reality is that these costs are disproportionately felt across American society. First, the sectors that have been hit hardest, such as leisure, hospitality and general services, employ a sizable fraction of vulnerable hourly workers, many of whom live paycheck to paycheck. The Federal Reserve documents that 40 percent of Americans would have difficulty covering an emergency $400 expense.8 Second, among those still fortunate enough to have a job, much is being asked of those deemed “essential,” as well as those who are returning to work in close quarters or with customer-facing roles. The uncomfortable truth is that these two sets of workers are disproportionately African American and Hispanic, have lower household assets and significantly lower base incomes.9 These are the same dimensions along which the disease is disproportionately experienced. There is no doubt that the disparate impact on certain communities magnifies the broader injustice they are currently experiencing.

The health care and economic costs of the lockdown require attention, and the goal of an economic opening should be to mitigate those important human costs. “Lives vs. lives” is an unambiguous truth.

Tradeoffs: economic activity and hospital capacity

The sober reality is that a vaccine may be a long way off, and might never arrive. Given this, we as a society need to clearly articulate what objectives we are prioritizing in the face of important tradeoffs in a world in which we will live with this virus for a long time. At a general level, we promote a willingness among policymakers to engage in informed experimentation by targeting openness designed to generate critical economic activity.

With this in mind, the objective is not to minimize positive tests. This is a categorically suboptimal approach, ensuring that we have no hope of moving forward on our objective of growing economic activity to attend to the very real human challenges of the lockdown. We should eliminate the illusion of categorical “safety.” In the absence of a vaccine, this is a fantasy. It is entirely reasonable to expect that cases will necessarily rise as we work through the challenges of carefully facilitating economic activity. Openness to experimentation should instead be subject to evolving hospital capacity. While the economic costs are valid and demand attention, no one should perish for lack of access to standard intensive care treatment. Intelligent experimentation needs to allow cases to rise without exceeding hospital capacity. Remember, the original policy narrative was to “flatten the curve” so that the hospital system would not be overrun as we spread the caseload over a longer time period—only recently has the conversation migrated to an illusory and unattainable notion of safety.

As of this writing, North Carolina and the U.S. overall are experiencing a significant upward trajectory in positive COVID-19 cases. This is to be expected as the virus migrates to previously less affected areas and critical economic activity begins to resume. This regional variation in new cases highlights the importance of localized, disaggregated data. Such an increase becomes highly problematic only to the extent that it imperils the healthcare system from being able to sufficiently respond. To navigate these knife-edge tradeoffs, both government and citizens must act responsibly.

As we consider navigating these tradeoffs, there are several critical caveats. First, we need to prioritize the protection of the segments of our population vulnerable to the virus. We need to develop an appetite for rising positive tests in general, but establish protocols to protect those for whom the implications of a positive test are especially dire. These are most critically the elderly, people with known comorbidities and those with vulnerable people in their households. New policies should provide benefits selectively to these populations so that they may avoid excessively risky activities. Second, we need to elevate testing and tracing so that we can better anticipate and manage hospital capacity in as close to real time as possible. While minimizing positive tests is not the sole objective, tests provide critical guideposts. Third, we need robust workplace and storefront safety protocols. Without both a real and perceived sense of safety, many individuals will stay put, counteracting potential improvement in the economic situation.10 Fourth, given that we are asking more of some Americans than others, policy support should be targeted to workers in higher risk professions. For example, federal policy should cover all healthcare costs related to COVID-19. Finally, it is important to note that a one-size-fits-all approach is entirely inappropriate given regional variation in hospital capacity and economic impact.

To execute on this approach, the “without which there is nothing” is data. We have to be able to measure, in relatively real time, how we are doing. Currently, policymakers and business leaders are flying relatively blind. Further, given the importance of geographic variation, we need both economic and health data at a granular level across a range of characteristics such as geography, industry and age group. That’s why the North Carolina CEO Leadership Forum, in collaboration with UNC Kenan-Flagler Business School and the Kenan Institute of Private Enterprise, is building a relatively real-time dashboard to help North Carolinians observe tradeoff outcomes. This will involve disease statistics, adjusted for measurement biases, with attention to the critical implications for hospital capacity. We will also effectively “nowcast” economic activity, with data curated not only from traditional government sources, but also a growing set of non-standard data on economic activity, such as foot traffic, air transport and credit card swipes. Experimentation without measurement is doomed to fail.

The healthcare and economic costs of the COVID-19 lockdown require attention, and the goal of any economic opening should be to mitigate those important human costs. The tradeoffs are not between “lives and livelihoods,” but rather “lives and lives”—and the only path forward hinges upon a healthy dose of risk-taking informed by real-time health and economic data.

Read the Full Kenan Insight
1See, U.S. Census Bureau’s Household Pulse Survey () and “Hospitals Report Fewer Heart Attacks and Strokes Amid COVID-19,” by Carrie MacMillan, Yale Medicine, May 6, 2020.
2 Ibid.
3 See, for example, “Eligibility for ACA Health Coverage Following Job Loss,” by Rachel Garfield, Gary Claxton, Anthony Damico, and Larry Levitt, May 13, 2020, Kaiser Family Foundation brief.
4 See, “Hospitals and Health Systems Face Unprecedented Financial Pressures Due to COVID-19,” American Hospital Association, May 2020.
5 See, “2020 Rural Hospital Sustainability Index,” Guidehouse Insights, April 8, 2020.
6 See, for example, “The Long-term Benefits of Short-time Compensation” Kenan Insights, June 24, 2020.
7 See, “Deaths of Despair and the Future of Capitalism,” by Anne Case and Angus Deaton, Princeton University Press, 2020.
8 See,
9 See, “A Basic Demographic Profile of Workers in Frontline Industries,” by Hye Jin Rho, Haley Brown, and Shawn Fremstad, Center for Economic and Policy Research Article, April 7, 2020
10 See, “How Did COVID-19 and Stabilization Policies Affect Spending and Employment? A New Real-Time Economic Tracker Based on Private Sector Data” by Raj Chetty, John Friedman, Nathaniel Hendren, and Michael Stepner, May 2020.

Data Commentary

Stuck in Phase 2.X?
September 10, 2020

September 13 will mark six months since U.S. President Donald Trump declared a national state of emergency in response to the COVID-19 a national pandemic.  And here in North Carolina, Governor Roy Cooper announced last week that the state will transition to “Phase 2.5,” with further easing of restrictions on certain places and types of activities including mass gatherings, playgrounds and gyms, but with other restrictions – such as those on bars and entertainment venues – remaining in place. It seems like a good time to take stock of where we’ve been, where we are now and what lies ahead.

What have we learned?

It’s fair to say that many of the dogmatic opinions from both ends of the political spectrum have been off the mark.  Yet some of what each side has espoused has proved out.  The truth of the situation is clearly somewhere in the middle, and an objective assessment of what we have learned in the last six months suggests the following:

  • Mass gatherings are dangerous, community spread is easy and wearing masks is tremendously beneficial.  Pretending otherwise has damaging consequences for individuals and organizations.  There’s no better case in point than the disastrous start of the school year at the large UNC system campuses. While there were substantial direct health consequences to the failed return to campus, the wider impact has been on the students and families forced to manage the fallout, as well as on the institutions themselves. The UNC system is now much worse off than it would have been if a more thoughtful approach had been undertaken (e.g., limiting the number of students on campus as other universities did, implementing widespread surveillance testing programs, and so on).  There is a salient lesson for broader policy in this debacle.  When governments, organizations and businesses make decisions on how to resume more normal operations, they can’t operate based on what they want to be true.  They must take into account the realities of what we know to be true about both the disease and human behavior.
  • Smart reopening of the economy without swamping the healthcare system is very feasible.  As we look at North Carolina as an example of “dimmer switch” reopening policy, we see that increased economic activity does not have to result in ping-pong public health policy.  The economy in North Carolina has been on a one-way road to reopening and never faced serious capacity constraints in hospitals (see our regional dashboard page).  Yet it is fair to say that, in hindsight, the state economy reopened too slowly.  A better policy would have been a shorter, but widely enforced, statewide “stay at home” order, broad implementation of mask requirements among businesses and a faster move to the current status.  This is admittedly Monday morning quarterbacking.  Real-time decision-making was difficult because of uncertainty about disease transmission and especially the lack of data on the true number of cases in the state.  Perhaps it was better to have erred on the side of caution than have risked a second full shutdown like some other states, but we should continue to aggressively press ahead with thoughtful reopenings.

Where are we now?

  • The broad economy is in limbo.  The August employment report was quite encouraging and showed a labor market continuing to improve.  However, spending is now growing more slowly nationally and has been flat for two months in North Carolina.  Small businesses are still extremely stressed, with the most recent data showing a decline in activity since mid-July.  Industry segments that serve as key indicators, such as apparel, general merchandise and transportation, have all stopped improving both nationally and in North Carolina.  We attribute much of the stall to people’s continued reluctance to undertake nonessential activities away from home because they sense conditions are unsafe.  To this point, our consumer consternation index ticked up in August in North Carolina, and is at the second-highest level above the national index since the pandemic began.
  • The healthcare situation is being handled with controlled community spread.  The North Carolina economy is effectively reopening without substantial increases in new cases, hospitalizations or deaths. An August blip in new cases in North Carolina is largely attributable to UNC system students and other young people becoming infected. With any luck, cases will continue to tail off now that many students have returned home (though risks remain for nearby communities from off-campus students who have not returned home). It is probably time to throw in the towel on contact tracing as an effective containment mechanism and admit that it can’t be done currently at the scale necessary for preventing community spread. Those resources are likely better spent on public health awareness programs and better testing.
  • Speaking of testing.  We still find it remarkable that there is effectively no national policy on testing, that tests are relatively hard to obtain for some people and results are sometimes reported with significant delays.  This is perhaps the most serious indictment of federal health policy, given that testing is an entirely fixable problem.  The “see no evil, hear no evil, speak no evil” approach to testing has not served the U.S. well, and has likely prolonged and deepened the severity of both the pandemic and the economic downturn.  Again, we can gain wisdom from universities where rigorous testing appears to be limiting spread on campus.  As we’ve been saying for months, testing is not just about limiting the spread of the disease, but also about building confidence among the public as conditions continue, we hope, to improve.  

Where are we headed?

  • Additional stimulus is likely needed, but not on the scale previously proposed by congressional Democrats. As noted already, the recent national employment report is very good news for the economy.  There were legitimate concerns that the sudden stop of federal stimulus in August (especially supplemental unemployment benefits) would tip the economy into another downturn.  The continued growth in nonfarm payrolls across almost all sectors of the economy was a huge relief and indicates that we do not appear to have started a double-dip recession in August. It also suggests that the Republicans were closer to the mark in terms of what an additional stimulus package should look like, at least in terms of size.  That said, a lot of people are still hurting. The unemployment rate remains elevated, especially among people of color, teens and those with lower educational attainment.  It remains important to provide additional support for a broad segment of the population struggling to stay afloat financially.  We can see this in our socioeconomic adversity index.  Even as the economy has improved, the index remains extremely elevated and has actually increased disproportionally for many segments of the population, including people under 40, households with children, middle-income households, single people and people of color.
  • The broad economy will remain in limbo until a vaccine is available.  Increasingly, it feels as if public health policy is becoming ineffective in generating economic growth.  We’ve said it before, but will say it again: Just because you open a business, it doesn’t mean people will go there (bars being the exception, apparently).  Airlines are a case in point.  There are relatively few restrictions on domestic air travel, yet air traffic remains down 70 percent.  Likewise, most brick-and-mortar retail establishments are open for business, but foot traffic at these locations remains about 20 percent below pre-pandemic levels.  While some permanent decline is to be expected given accelerated shifts to online spending (and business closures), a substantial rebound will occur once vaccinations are widespread.
  • We must focus resources on getting kids back to school.  First and foremost, the learning deficit students are experiencing will have significant long-run consequences and is highly inequitable.  However, it’s also important to consider that childcare is a key bottleneck in the economic recovery.  Schools provide about 30 hours per week of free childcare which is crucial for many parents, especially low-income and single parents.  While the unemployment rate has continued to decline, this does not capture the fact that the labor force has contracted by more than 3 million workers, many who have been forced out of jobs because of childcare considerations.  In addition, scores of workers are having to juggle the responsibilities of working from home and attending to children schooling at home.  This lowers hours worked and productivity, and, of course, is also a huge stress on parents.  As vaccine distribution decisions are being debated, we believe that near the front of the line should be primary and secondary school teachers, parents of school-aged children, and as soon as safely possible, children themselves.  We also suggest rapidly expanding programs that put recent college graduates (who are experiencing unprecedented unemployment) to work in virtual and in-person classrooms for the next year or two to help overwhelmed teachers. 

So, putting all these points together suggests that we are stuck in “Phase 2.X” of reopening.  Until a vaccine is widely available and effective, people will not be able (or willing) to resume fully normal activity, and the workarounds of remote work and school are not sufficient for the economy to return to pre-pandemic output levels.  In fact, it’s safe to say that the speed at which the economy can return to pre-pandemic conditions will depend almost entirely on both when a vaccine is available and how rapidly and intelligently it’s distributed.

(Kind of) Back to School Amid COVID-19
August 17, 2020

In this week’s commentary, we’ll discuss North Carolina’s health statistics and current developments in the economic landscape, and offer some thoughts on the reopening of schools and universities.

First, North Carolina continues to show an overall improving trend in relevant healthcare statistics.  The state’s healthcare utilization remains in a relatively good position, and national utilization is starting to improve for first time since April. Despite some major hotspots, hospitalization rates both in North Carolina and across the country are falling, as are positive test rates, overall new cases and the basic reproduction rate (R-naught).  Perhaps most significantly, COVID-related fatalities have leveled off; accordingly, going forward, we expect the number of fatalities – which lag behind other health-related statistics – to fall in a manner consistent with current developments in the rest of our metrics. 

Second, while North Carolina health statistics show some signs of promise, the overall economic situation (both in our state and around the country) has undeniably plateaued. The fears we expressed in our earlier commentary on the general fragility of the economic recovery appear to be frustratingly warranted. We’re witnessing a dip in both aggregate spending and small business activity. As a result, our consumer consternation measure, designed to capture the extent to which households are unwilling and/or unable to engage in nonessential consumption, has also ticked up slightly. Although we witnessed significant improvement in both statewide and national consumer consternation from a peak in April to mid-June, nonessential economic activity has stagnated through most of July and August. A reversal in this statistic — though slight — only highlights the impediments to a more robust recovery. Consumers must both be safe and feel safe before they are likely to engage in nonessential activity. Collectively, these developments, at best, reinforce the likely slow, grinding nature of this economic recovery and, at worst, serve as a possible harbinger of a W-shaped (double-dip) recession.

One modest bright spot we do observe relates to insured unemployment, which has now dipped to 5 percent in North Carolina. Unfortunately, the overall U.S. number remains considerably higher. Despite the fact that significant improvement is still needed on the labor market front, as millions of Americans remain out of work, there are no concrete signs of another stimulus package forthcoming. At best, it may be several weeks before a presidential executive order delivers a $300 unemployment top-up extension (as of this writing, there does not appear to be any roadmap for congressional action, despite both sides of the aisle agreeing in principle on the need for additional support). Given this delay, he relevant questions are: Will businesses continue to recover in the absence of a fresh round of stimulus if their customers’ financial situations become increasingly constrained? And at an aggregated level, will we see a further dip in economic activity as these household savings run out?

As we discuss high-level aggregates, it’s important to remember that economic statistics are not abstract. This dispute in Washington coincides with a frustrating human reality on the ground. The conditions that describe socioeconomic adversity, both in North Carolina and around the country, remain dire. Our measure is designed to capture how likely individuals are to be experiencing moderate or high levels of mental adversity (anxiety, worry and/or depression), healthcare adversity (delayed or unavailable medical attention), and food insecurity (sometimes or often not having enough to eat). Measured in this way, socioeconomic adversity continues to sit well above pre-crisis levels. As a heart-wrenching testament to the personal challenges facing many Americans, nearly 41 percent of respondents to a CDC survey reported “at least one adverse mental or behavioral health condition” (three to four times higher than what the CDC reported at the same time last year). The study also shows that the number of Americans contemplating suicide is soaring.1 Mental health support systems are “needed urgently,” according to the CDC.

An additional aspect of adversity is the hard-to-gauge, but sizable, cost associated with keeping children and older students out of school. Much has been written about the significant challenges many (particularly women) face with children at home competing with the demands of work. As a result, there is now a far greater appreciation for the extent to which economic activity cannot fully recover until the children of those in the workforce are back in school. However, we also know that the developmental and educational costs of keeping so many children out of schools are immense, and that some of these costs could become dangerously semi-permanent.

In the face of all this, school districts, colleges and universities around the country are struggling with the near impossibility of successfully reaching two competing goals: safety and learning. Despite what appears to be an intractable knife-edge challenge, failing to deliver along either dimension carries serious costs. However, we can learn from continental Europe,2 where many schools and universities are already open or cautiously opening. Following their lead, we need to marry an elevated government-level testing and tracing regime with a renewed sense of individual responsibility, in which we diligently practice social distancing, wear masks, wash our hands and stay home if feeling unwell. Ironically, the avenue to economic freedom flows through an effective government bureaucracy, coupled with a personal responsibility to the community.Our children’s future cannot be collateral damage.

1 Czeisler, M.É., Lane, R.I., Petrosky E, et al.(2020, June 24-30) Mental Health, Substance Use, and Suicidal Ideation During the COVID-19 Pandemic. Morbidity and Mortality Weekly Report 2020; 69: 1049–1057. DOI: icon

2 Zakaria, F. (2020, August 16). On GPS: Denmark's top tips on opening schools [Video file]. CNN. Retrieved from

Calm before the Storm?
August 10, 2020

In this week’s commentary, we’ll discuss the robustness of the improved health statistics, what the president’s executive orders mean for the economy and the first estimates from our undetected cases model.  We do this with an eye toward what could be impending deterioration on both the pandemic and economic front.

The healthcare data mostly show improvement over last week, both nationally and in North Carolina. The number of new cases, hospitalizations, positivity rates and infection transmission rates (“R- naught ”) all declined.  While modest, these sustained declines over the last two weeks indicate that the recent surge of infections might be reversing.  On the other hand, increasing death rates suggest that far too many people are still paying the ultimate price for the carelessness of those who have not taken the pandemic’s risks seriously. And healthcare utilization rates (our primary variable of concern from an economic policy perspective) held steady at acceptable levels.  In North Carolina, the rate has remained in the mid-70 percent range for almost two months now, despite the increase in cases and hospitalizations during the same period.

On the economic front, we see a continued plateauing of consumer spending that is well below pre-pandemic levels.  Spending rates, both nationally and in North Carolina, are essentially unchanged since mid-June across almost all the major industry sectors we’ve identified as most sensitive to the pandemic (restaurants, apparel, transportation, etc.).  In North Carolina, entertainment spending spiked during the last week of July, but we’re unsure if this is anything more than a statistical blip.  Small business activity in the state has stalled, but remains ahead of national activity. Certainly, the best news on the state economic front comes from both the ongoing decline in the insured unemployment rate, which ticked down to 6.4 percent at the end of July, and the continuing separation from the national rate, which remains near 11 percent.  We do not yet know the full employment statistics for North Carolina for July; however, the national numbers continued to improve, so we’re optimistic that North Carolina will follow suit.  Overall, North Carolina continues to rank near the top of all states in labor market recovery.

But is this the calm before the storm?  On the healthcare front, nonessential activity continues to expand, both nationally and in North Carolina.  Most recently, many colleges (including those within the University of North Carolina system) have begun returning to in-person classes.  Some K-12 schools are resuming classes this month.  More people are returning to normal work locations.  A resurgence of cases as a result of these activities could lead to further policy restrictions, but just as importantly, to an increase in consumer and worker anxiety that depresses economic growth.  Our Consumer Consternation Index has remained nearly unchanged on both the state and national level over the last month, and actually ticked up slightly in our most recent reading.  Given how closely the index tracks (and generally leads) broader economic conditions, the uncertainty on the healthcare front for August activity is a concern.

As of this writing, we haven’t seen a compromise in Washington on further economic stimulus. Instead, the president has moved unilaterally with executive orders to extend (at a lower level) federal supplements to unemployment benefits, to suspend payroll taxes for some wage earners and some debt-payment relief and to provide a moratorium on some evictions.  It’s a surprising gamble by both sides.  While the precise impact of the executive orders remains fuzzy, it does appear that they will drive meaningful benefits for some households in the near term.  However, our view is that a compromise package is needed, because many problems can’t be effectively solved by executive orders.  Perhaps the two most pressing issues are continued support for small businesses and broader relief to mortgage, rent and student loan payers.  The benefits outlined in the president’s executive orders are not only less generous than those proposed by the Democrats (which we believe were excessive in some dimensions) but importantly, are below levels received by beneficiaries through July.   Consequently, given that many households and businesses will be worse off now, there’s a significant risk not just to those directly affected but also to the economy more broadly.  In fact, it’s likely that the declines we’ve been seeing in unemployment during the last three months could reverse in August.  This would further adversely affect the already precarious situation facing state government budgets.  We support a return by the U.S. Congress to negotiations around extending the Paycheck Protection Program (PPP) for small companies, providing some relief to states who otherwise will be forced to contract spending soon (including on essential services) and having a more deliberate (but reasonable) unemployment and direct stimulus payment program. 

We conclude with a summary of work we’ve been doing to estimate the number of undetected cases.  One of the challenges facing policymakers, business leaders and the general public in understanding the spread of COVID-19 is the fact that many cases go undetected because of testing shortages or infected individuals not seeking testing (e.g., asymptomatic individuals who may not even consider the need for a test). Having an accurate estimate of undetected infections could help planners make decisions about testing policy and economic openness, let business leaders better understand risks to their workers and customers and inform economic projections. The state of North Carolina provides an interesting case study in infection modeling because the number of positive tests has grown steadily faster than the number of hospitalizations.  Likewise, hospitalizations in the state have grown more quickly than deaths attributed to COVID-19.  A very simple way to understand the disconnect between deaths and reported new cases is to estimate the total number of cases statewide using lagged data on the number of deaths and recent estimates for infection fatality rates that we provide in our COVID-19 statistics dashboard.  The graph shows that these “death-implied” estimates in North Carolina rose rapidly in March and April,  then leveled off.  This is obviously at odds with the number of new positive tests, which was quite low in March and April and has only recently approached the number of death-implied cases.

Of course, much better models have been proposed for estimating the number of undetected infections.  In our analysis (full report available), we examine a specific model and apply it to data in North Carolina.  The model provides estimates of undetected infections (IU) that are plausible, and fits observed levels of positive cases (ID), hospitalizations and deaths very well.  We find that the estimated level of undetected cases grew rapidly in early March (see figure below). Estimated undetected cases tapered off in mid-March, grew in early April, and peaked again in mid-April.  Since late April, estimated undetected cases have declined substantially, but according to our estimates it was not until mid-May that the number of detected cases exceeded the number of undetected cases. Over this period, the total number of estimated cases stayed fairly constant (100-150 per 100,000).  Our results suggest that the substantial increase in testing capacity over the last few months in North Carolina has been successful in identifying a higher percentage of infections.  However, it also suggests that much of the recent increase in the number of positive tests represents actual new cases, as opposed to being a consequence of more testing.  One concern about our analysis is that we are not able to condition on the age of those with detected cases or who are hospitalized, and consequently, we may underestimate undetected cases if the average age of those infected is declining.  Our estimates could also underestimate cases if the quality of care has improved over time and reduced hospitalization and death rates in a way the model does not capture. 

Economic Danger Zone
August 3, 2020

In this week’s data commentary we’ll provide our usual review of health statistics, but primarily focus on what is an increasingly perilous juncture for both the U.S. and North Carolina economies.  Specifically, the failure of Congress to agree on a new stimulus plan is feeling more and more like a game of chicken, with U.S. households standing between the onrushing vehicles.  Hopefully, there is still time to slam the brakes on the rhetoric and approach the problem with solid economic logic.

Latest Data

First, the data.  COVID-19 health statistics have improved both nationally and in North Carolina.  Nationally, it appears that a peak in new reported cases and hospitalizations was reached in late July.  A similar peak occurred in North Carolina. Encouraging trends are starting to show in positive test rates as well.  In contrast, the death rate (which lags new reported cases and hospitalizations) has continued to increase both nationally and statewide.  

This week, we added to the dashboard estimates of “R- naught,” or the virus reinfection rate, which measures the average number of people a currently infected individual is expected to infect.  Values less than 1.0 are consistent with containment of the virus. Estimates provided by Covid Act Now suggest that the rate in North Carolina has fallen below 1.0 recently, and the national number is almost there.  Overall, good news in the battle against the virus, although a sustained value below 0.9 is needed to reliably reduce cases on an ongoing basis.

In contrast, the economic statistics are not as encouraging.  Our measures of consumer spending continue to tread water.  Some important sectors, such as transportation and entertainment, appear to be dipping over the last couple of weeks. The unemployment rate remained steady in North Carolina and ticked up nationally. Small business activity also stayed flat.  As we discussed in last week’s commentary, both economies appear to be plateauing after a period of rapid rebound. Our measures of socioeconomic adversity continue to trend up at the national level, although trends in North Carolina are harder to discern because the data are noisier.

What’s Next Matters

A key pillar of the CARES Act was the federal unemployment supplement of $600 a week.  These payments alone exceeded the weekly unemployment benefits provided by most states, and together, benefits provided income levels of between roughly $21 an hour and $33 an hour (based on a hypothetical 40-hour work week).  These payments actually increased incomes for many people who lost their jobs. In fact, the combination of these payments and other stimulus income led to a second-quarter aggregate disposable personal income growth rate of +42.1% (at an annual rate)—the highest on record.  The payments, while very generous, were important for sustaining the economy during the near-national shutdown.  However, the $600 unemployment supplement officially expired on July 31, and what will replace it remains highly uncertain.  In addition, other terms of new stimulus also remain uncertain. 

The Republicans make the case that an additional supplement of $600 a week is so generous it will discourage lower-wage workers from seeking work.  The Democrats argue that the disastrous state of the economy means that most people seeking work will not find it, so incentives are not a major issue.  Adding to the debate is a study released by the Tobin Center for Economic Policy at Yale University. The findings suggest little effect of unemployment insurance on actual employment levels during the onset of the pandemic or in the weeks immediately following the implementation of benefits.

So who’s right?  Both the Republicans and the Democrats have valid points.  It’s inconceivable that, with a large majority of workers receiving more in unemployment than they would earn if employed, that a large number of lower-wage workers would have much incentive to reenter employment.  Regardless of what happened during the height of the shutdown (when many other forces were at play), benefits will need to come back in line with historic wages if the economy is to fully reopen. It’s important to examine the issue from the perspective of potential employers as well.  If benefits stay at such high levels, many businesses will not be able to afford wages that are needed to reemploy workers.  This is most pronounced in the service and retail industries, where businesses are struggling to survive.  On the other hand, the Democrats have a valid point in that the supply of labor is likely to exceed demand (at the previous equilibrium wage) for the foreseeable future.  Many individuals and households are currently facing dire circumstances through no fault of their own, and government assistance is needed to prevent another contraction.  In addition, there are still very vulnerable segments of the population for whom the health risks of returning to work are substantial.

What, then, is the preferred path forward?  Congress should extend supplemental benefits at a more modest level (maybe $300 a week, which is closer to the $200 a week that the Republicans have proposed), but also provide businesses with a grant of roughly $300 a week per new employee to add unemployed workers to their payrolls at a wage of $600 a week or more.  Extending these benefits for 12 weeks will effectively push the same level of income to many unemployed individuals, while at the same time reattaching them to the workforce and generating economic output.  Such a proposal would be costly for the federal government, but would lead to better outcomes for the broader labor market and economy.  This is just one possible mechanism, but support now needs to be directed toward restarting growth and reemploying people, not to extending incentives to remain detached. Other mechanisms have been suggested that would achieve the same goal.  That said, not everyone will be reemployed quickly, so any package should contain other safety nets for those currently receiving unemployment benefits—such as additional mortgage, rent and student loan payment forbearance.  In addition, consideration should be made for those with high health risks (e.g., workers over 60 years old).

Phase 3?

We are expecting an update on North Carolina’s phased opening this week.  Although conditions are improving, the changes are off of a much worse base than just a month ago. Consequently, it’s hard to make the case that the state is safer than it was on July 14. That said, North Carolina has managed the recent increase in cases well and demonstrated that there is headroom in the healthcare system for controlled upticks in infections.  Is it enough for a move into Phase 3?  Not yet, unfortunately.  The state can undertake some additional conservative reopening measures, but needs to ensure conditions don’t deteriorate significantly as people steadily increase nonessential activities away from home (including tens of thousands of college students returning to campuses).  Let’s hope everyone does their part to contain the virus in the coming weeks, and we’ll revisit the situation at the end of the month.

A New Plateau?
July 27, 2020

The health and economic data from this past week brought both good and bad news about the state of affairs in North Carolina. Health data suggest the growth in new cases is slowing, that hospital capacity remains available and that we might be getting a better handle on identification.  While this is certainly encouraging in the battle against the pandemic, a similar levelling off in business activity does not bode as well for the economy. In this week’s commentary we seek to unpack some of the details in the data to understand what may be a new plateau.

Signs of Stabilization in N.C. cases

The most recent data for the state of North Carolina provide some signs of stabilization of new infections. The number of new daily positive tests for COVID-19 has levelled off near 2,000 (or 19 per 100,000). Statewide hospitalized COVID-19 cases stayed close to 1,200 (11 per 100,000).  Likewise, the average number of new daily reported deaths has remained around 20 (0.19 per 100,000).  We even observed a slight tick down in the positive test rate.  Of course, these numbers are just snapshots and not reliable indicators of what will come, but nonetheless provide some hope that new infections may be reaching a plateau.

There was also good news this week on healthcare utilization rates in North Carolina.  First, we continued to see stability in our statewide measure in the 75%-80% range.  Second, we were able to examine regional data for North Carolina for the first time based on new daily statistics reported by NC-DHHS.  We are very excited about these new data because we believe that increasingly decisions on openness will need to be made more regionally.  These data will help both policymakers and business owners understand conditions in specific areas within North Carolina. We are currently working on economic statistics to track economic activity using these regional definitions and hope to have those on the dashboard within the next two weeks.  Perhaps most importantly, these data show what appear to be good conditions in healthcare utilization rates across the state.  All regions appear to have capacity in either available or unstaffed inpatient hospital beds as well as intensive care unit (ICU) beds.  Availability of ventilators is very good in all regions. While a rapid flare-up in a region could quickly utilize capacity, the current conditions are reassuring.

N.C. Economy

Now, the bad news.  We continue to see signs of a stall in economic activity in North Carolina.  Spending data for the week of July 11 (the most recent available) show activity at a level that is roughly equivalent to the week of June 20 and still about 8% below January levels.  While this is a huge rebound from the April trough of -33%, conditions do not appear to be improving further in recent weeks.  We had some hope that the Independence Day holiday was contaminating growth estimates, but this does not seem to be the case.  Of further concern is that we see the levelling-off of activity across all of the sectors that we believe are the best indicators of COVID-19 impacted businesses (such as apparel, entertainment, restaurants and transportation).  Small business activity has also plateaued and may even be showing signs of decline. Labor market conditions have also stopped improving in North Carolina—despite continued declines in June in the insured unemployment rate, the July values are stuck just above 8%.  

We believe that economic conditions in North Carolina continue to track national trends both because the economies are intertwined as well as because N.C. consumer attitudes are shaped by national trends.  For example, in spite what appears to be signs of stabilization on the new infection front in North Carolina, the (preliminary) week of July 18 reading for our Consumer Consternation Index ticked up for the first time in a month.  We see continued signs of socioeconomic adversity both nationally and in North Carolina as further weighing on consumers’ ability and desire to spend. This comes as we approach a possible fiscal cliff for unemployment insurance and the end of forbearance of loans and eviction moratoriums.  Consumers, of course, anticipate these potential disruptions, so the sooner Washington can provide clarity on new policy, the better it will be for the economy (ceteris paribus).  Finally, the school-year starting virtually in most jurisdictions will put continued pressure on parents, especially mothers, and will likely reduce hours worked (not to mention induce further mental and emotional stress).

We are also watching how traditional seasonal patterns in spending (e.g., back to school buying) will be affected by the pandemic.  We expect much lower spending on children’s apparel and traditional school supplies in July and August.  In contrast, the largely virtual/hybrid school model will drive higher than usual technology spending as parents try to prepare home spaces for a better educational experience.   The mix-shift of consumption titling away from traditional goods toward electronics will likely be a further hit to brick-and-mortar retailers in North Carolina since technology goods are more often purchased online.  However, we also wonder if the summer tourism season may extend into September; with many schools opening in virtual-only mode, some families may sneak in an additional week in the mountains or beach.   Expect more on this in future commentaries.

New Insights on Undetected Cases

We have been wondering for some time how effective testing has been in identifying infections in North Carolina.  While we are working on a statistical model for undetected cases, a new study released last week has provided additional insights on how deaths from COVID-19 can shed light on testing in North Carolina.  The study was a meta-analysis by Meyerowitz and Merone of 26 case-fatality rates from other studies and was able to provide a more precise estimate than previous research.   Case-fatality rates, also known as infection-fatality rates, measure the likelihood of dying from the disease after becoming infected.  The values from previous studies examined by the analysis ranged widely from as low as 0.09% to as high as 1.60%.  By combining the results of prior studies, the authors were able to generate a point estimate of the infection-fatality rate of 0.68% with a 95% confidence interval of 0.53-0.82%.     

Why is this important for understanding testing in North Carolina?  We had been using the number of deaths and the infection-fatality rate to infer the total number of cases in North Carolina.  Given the uncertainty, we decided to use a conservative estimate of 1.4% estimated from New York data. However, we had little confidence in the results because they suggested the number of daily new infections in North Carolina were averaging about 1,400 (i.e., about 20 deaths per day divided by 0.014) and the actual number of reported new cases is now consistently higher than that.  The updated point estimate of 0.68% suggests new infections in North Carolina are closer to 2,900 (with a confidence interval of about 2,400 to 3,700) which is not too much higher than the current average of reported new cases of about 2,000.  Taken at face value this suggests that North Carolina is now identifying somewhere between roughly 55% and 85% of new cases which is likely a much higher percentage than even a month ago. We have added to the dashboard the updated calculations for death-implied new cases and confidence intervals based on a two-week lag of seven-day average daily deaths.

All in, we see much to worry about on the economic front even as the healthcare front appears to be stabilizing some. As always, we encourage individuals to do their part to reduce the risks of new infections through social distancing, use of masks and diligent hand-washing and personal hygiene.  Economic conditions are likely to only improve subsequently as perceived risks of infection go down, and we must take our shared responsibility seriously.

Up Next

Next week, we hope to have more insight into how the new federal stimulus package is evolving with a close eye on support for small businesses and the unemployed; the potential for NC to transition to Phase Three reopening; and nonstandard seasonal trends in consumer spending.   

Will COVID-19 Bring a Double-Dip Recession?
July 21, 2020

The recent spike in COVID-19 cases nationally, including a large bump in North Carolina, has us worried on a number of fronts—including its potential impact on the budding economic recovery. The $64,000 question has become, “Will we see a double-dip recession?” After the substantial rebound in consumer spending in May and early June, the most recent data suggests a stall in activity over the last month. Combined with an out-of-control worsening of the pandemic in several states, this trend is worrisome. Yet current conditions do not guarantee another plunge in the economy like the one we experienced in April. In this commentary, we look at the situation from our preferred three angles: health statistics, economic data, and individual behavior and welfare assessment.

Rising health uncertainty

First, let’s recap current conditions with the pandemic itself. (We remind readers that we are not doctors or epidemiologists; we are simply providing our take on publicly available health statistics through the lens of their broader socioeconomic impact. No one should consider this column advice on public health matters.) While new cases are soaring in many states, the severity is quite varied. Some states are handling the situation just fine, while others are increasingly overwhelmed. Looking specifically at North Carolina, the state remains somewhere in the middle, as it has for much of the pandemic. Fortunately, the situation appears to remain under control for now.

While North Carolina has been consistently setting daily records for new cases, the associated numbers of hospitalizations and deaths continue to lag in terms of growth rates. To be clear, hospitalizations are growing and deaths have ticked up in the last few weeks, but the magnitudes are very different. For example, data from the week ending July 16 show the number of new cases in North Carolina over the previous month to be up about 84 percent, whereas the number of hospitalizations is up 37 percent and the number of deaths has remained basically flat (with the caveat that reporting delays for deaths appear longer than for new cases or hospitalizations). The most likely explanations for these trends are:

  • More hospitalizations and deaths are coming, owing to the lag between infection and serious illness and death for many patients.
  • Improved testing is identifying more cases that will not end up in hospitalization or death (we are working on a model for unidentified cases and hope to share that in the coming weeks).
  • Better treatments are reducing deaths and time spent in the hospital.
  • The demographics of infections are changing, with an increased number of younger and healthier people becoming infected.
  • Hospitals are admitting marginal patients more often because they are less concerned about being overwhelmed with severe cases.

Any and all of these explanations could support the observed trends, but they also beg the question of how economic policymakers should respond. At its essence, this is a very challenging forecasting question. While the state’s hospital system currently has sufficient capacity to handle new cases, a rapid acceleration in demand from increased new cases or an increase in the severity of cases could result in some facilities (or broader geographies) getting overwhelmed. In our view of how broader economic conditions should be metered, this is the critical constraint. North Carolina must avoid what happened previously in New York and New Jersey and is now happening in other parts of the country. Yet with the uncertainty about what is causing the divergence in healthcare statistics, it is very difficult to determine appropriate “openness” policies. We were glad to see the that N.C. Department of Health and Human Services is now providing regional data on hospitalizations, but we would also like to have additional data that could shed light on the details of the problem (e.g., the age of patients who are sick, hospitalized or who have died).

Where does this leave the economy?

The reality is that short of a return to Phase 1 closures (which we do not support at this time), there is not an effective way for policy to meter new cases (besides advocating for the obvious and essential precautions of social distancing, handwashing and wearing of masks in public—all of which we strongly support). So, with most businesses and consumers currently left to make their own decisions, what are we seeing?

  • Aggregate spending growth has stalled nationally and in North Carolina. We are observing this in the most sensitive sectors, such as entertainment, apparel, healthcare and restaurants. Interestingly, transportation has continued to grow at a steady rate, suggesting that more businesses are operating, but likely at lower average output levels (summer recreation travel is also a contributor).
  • We continue to be surprised at how tightly the state economy tracks the national economy in almost all spending categories. This is potentially troubling, because it suggests that even if North Carolina can remain on top of the pandemic while other states struggle, our economy will be impeded by the national trend. However, unemployment trends have started to diverge a bit, with unemployment in North Carolina continuing to trend down, even as the U.S. rate flattens out. The current difference of almost three percent is the largest in more than a decade.
  • Small business activity (which leveled off sooner than overall spending) had been another relative bright spot for North Carolina, with activity almost returning to pre-pandemic levels by late May. But the most recent readings suggest another decline over the last few weeks. (Recent data are slightly confounded by the Independence Day holiday; coming weeks will provide clearer evidence on the current trend.)

Overall, we are seeing clear indications of a stall in activity, but fortunately there is not yet an outright double-dip. Our concern, though, is that it may be coming. As conditions continue to worsen in many states, we will see some new policy lock-downs, which will mechanically reduce activity (and spillover to North Carolina as we mentioned above), but these will also affect broad consumer willingness to engage in nonessential activities.

The consumer is number one

Our mantra for months has been that there is no way to have a robust and sustainable economic recovery without consumers both being safe and feeling safe as they undertake nonessential activities away from home. (See, for example, this Goldman Sachs white paper.) Again, we acknowledge the massive public health component to the pandemic, but the negative impacts on society are much broader than even the (admittedly severe) healthcare outcomes.

This was the logic behind constructing our Consumer Consternation Index, as well as our desire to understand how different demographic groups are being affected by the pandemic. What we have been seeing over the last few weeks is concerning in that respect as well. After peaking in April, consumer concern over undertaking nonessential activities away from home was diminishing consistently until June. During the last month, consternation in North Carolina has leveled off, and even ticked up slightly in late June. Nationally, we see a similar flattening trend, but consternation has actually fallen to a slightly lower level overall than in North Carolina (though this difference may not be statistically significant). In short, and as we would expect, the consternation trends are mirroring trends in employment and aggregate spending (though some of this is mechanical, since the index includes spending data on some nonessential items). We reiterate that, while “openness” policies can influence the consternation index, we observed significant changes in the index before policy changes were made. Consumers make their own decisions, and without consumers on board, openness policies will not return the economy to pre-pandemic conditions.

Finally, we examine trends for specific socioeconomic and demographic groups. Looking at our Index of Socioeconomic Adversity, we see a notable uptick in July both for the U.S. and North Carolina. Clearly the broader impact of the pandemic is intensifying, and this is bad news for those individuals most under pressure as well as for society as a whole. In particular, we note:

  • Those older than age 59 were less affected than other age groups initially, but recent data for North Carolina shows a spike in their adversity levels (the national index has also increased, but not as sharply). Older individuals are likely concerned that the risks of the pandemic to them in particular are increasing disproportionately, and are undoubtedly worried about how long they will have to stay home to be safe.
  • Non-white households continue to face higher adversity than white households, though on the national level, all have seen an increase in adversity in recent weeks. The North Carolina data is too noisy to infer current trends.
  • Households with children have been facing relatively more adversity during the last month.
  • Married households, which had been faring better than single households, have experienced an uptick in adversity in recent weeks.
  • Low-income households continue to face severe levels of adversity, but recently middle-income and high-income households have also started to tick up.

Taken together, these indicators suggest a negative trend in terms of the financial and social conditions facing individuals. At a minimum, this poses a risk to continued economic growth on both the state and national level. The immediate policy response is not obvious for North Carolina, where health conditions are worsening but seem under control. To a large extent, the path of economic activity in North Carolina will be driven by individual and business decisions, not government decisions. For this reason, we reiterate our simple advice that the responsible individual behaviors of social distancing, hand washing and public mask-wearing are crucial components of the economic recovery.


As the COVID-19 pandemic continues to have serious economic implications, many researchers have accelerated their investigations to better understand the potential short-and long-term effects on workers, businesses and the economy at large. On this page, we present a select list of recommended academic studies and empirically rigorous reports that focus on the economic impacts of the COVID-19 pandemic. These studies are primarily early working papers, and have not been vetted by the peer review process, so check back regularly for updates. In addition, we will update this page with other studies as they are released.

All NBER papers related to COVID-19 are open-access:

Recommended Research

Brown A., E. Ghysels, and L. Yi, 2020, Estimating Undetected COVID-19 Infections—The Case of North Carolina, UNC Kenan Institute working paper.

Acemoglu, D., Chernozhukov, V., Werning, I., & Whinston, M.D., (2020). Optimal Targeted Lockdowns in a Multi-Group Sir Model (NBER Working Paper No. 27102) Retrieved from: National Bureau of Economic Research website:

Chetty, R., Friedman, J.N, Hendren, N., & Stepner, M. (2020). How Did COVID-19 and Stabilization Policies Affect Spending and Employment? A New Real-Time Economic Tracker Based on Private Sector Data. Retrieved from:

Djogbenou, A., Gourieroux, C., Jasiak, J., Rilstone, P., and Bandehali, M. (2020). Transition Model for Corona Virus Management. Retrieved from:

Gourieroux, C., & Jasiak, J. (2020). Time varying Markov process with partially observed aggregate data; an application to coronavirus. Retrieved from:

Gourieroux, C., & Jasiak, J. (2020). Analysis of Virus Propagation: An Overview of Stochastic Epidemiological Models. Retrieved from:

Housni, O.E., Sumida, M., Rusmevichientong, P., Topaloglu, H., & Ziya, S. (2020). Future Evolution of COVID-19 Pandemic in North Carolina: Can We Flatten the Curve? Retrieved from:


Covid-19 Testing: A Primer for Employers and Business Leaders

Updated as of: August 5, 2020

Overview: Determining the appropriate levels of COVID-19 testing necessary for the complete and safe reopening of the economy is incredibly complicated and nuanced. There are two main items to consider: the science behind testing and the logistics of testing.

Science: The science surrounding COVID-19 is complicated by the “newness” of COVID-19 – with such a new virus there are many things that the scientific community does not yet know. For example, the overall prevalence of the virus in communities remains unknown. Yet, knowing the overall prevalence is important for determining the accuracy of tests (both viral and antibody) and for determining the overall level of antibodies needed to protect an individual. An example of how this further complicates testing is the vast differences in the false positive antibody test results. In areas with a prevalence of 5%, the CDC notes that only about 50% of those who test positive will have antibodies, compared to areas with a prevalence of 30%, where roughly 88% of positives will be accurate.1 Another complication is how quickly tests were developed and FDA approved. The FDA use of Emergency Use Authorization, while speeding up development of certain products, has led to some COVID-19 tests with poor accuracy.2 In addition to these issues, estimates vary widely in terms of how many tests need to be conducted on an ongoing basis. Experts agree that the level of infection in a community will affect the number of recommended tests for identifying all cases. Since community infection rates remain largely unknown, this appears to be contributing to the variation in recommended levels of testing. However, there are other benefits to testing (discussed below) which may also contribute to variation in recommendations.

Testing logistics provide another challenge. These include: time gaps from testing (such as the wait to get tested and receive results, and how often do people need to be tested), supply chain issues (such as labs not having the proper equipment to complete the tests, and lack of PPE), testing infrastructure (and importance of contact tracing), and types of tests (testing versus screening). In addition, legal challenges are beginning to emerge – such as liability of employees and employers, requiring tests, and health data protections.

Testing Basics

Testing is the most critical part of any plan to ensure a safe and complete reopening of the economy. Testing, however, is further complicated by the underlying uncertainty as to the overall rate of infection in the population. Yet, while ensuring proper test availability is crucial, a testing protocol cannot be fully effective without proper contact tracing and monitoring. Thus, the effectiveness of testing is further complicated by the effectiveness of contact tracing.

Types of Testing

Viral Antibody
Description Indicates if person has an infection currently. Detects presence of antibodies to an infection. Can take up to 3 weeks after an infection to develop testable antibodies.
Results Dependent on test, generally 1-2 days when there is not a significant backlog Generally 3-5 days
Accuracy Unclear due to multiple factors including manufacture of the test and overall unknown prevalence of infection. In addition, accuracy appears to depend on where the infected person is in the infection cycle and the type of test. Thus, there is a wide range of estimated false negatives (from 2% to 29%).3 Unclear due to the unknown overall prevalence of infection and on the unknown amount of antibodies needed to provide protection against future infection. Some research suggests false positives can be quite high for a single test.4
Availability See DHHS Website. Available via most healthcare providers and laboratories.

Health Screenings for Employees

Health screenings in conjunction with testing, can help businesses identify employees who may have the virus. OSHA recommends employers develop policies and procedures for employees to report when they are sick or experiencing symptoms of COVID-19. Additionally, the CDC recommends conducting daily health checks. These health checks can include:

  • Temperature screening
  • Asking questions about potential COVID-19 symptoms.

However, the CDC notes, it is important to conduct health screenings in a way that keeps employees safe (e.g. social distancing) and respects their privacy (e.g. conduct screenings in private). Also, signs and symptoms can vary, and some carriers may never exhibit symptoms (asymptomatic) or have not yet exhibited symptoms (pre-symptomatic). While businesses should seek their own specific legal advice regarding testing of employees, current legal opinions appear to indicate that businesses may provide testing as a healthcare option (akin to offering flu shots) but may not require employees to be tested.

Employer guidance resources (see appendix for full text of links):

State Monitoring Indicators per White House Recommendations5

In response to the spread of COVID-19, many states issued stay-at-home orders in an attempt to contain the spread. To assist states with their reopening plans, the White House released guidelines containing suggested indicators to monitor the spread of COVID-19 and allow for a phased reopenings. However, it is important to note that state planning is left to the discretion of state governors. Additionally, local government can impose even stricter restrictions. The suggested indicators include some criteria related to testing and others related to symptoms and hospital capacity:

COVID-19 Symptoms and COVID-19 Cases:

  • Downward trajectory of influenza-like illnesses (ILI) reported within a 14-day period
  • Downward trajectory of COVID-like syndromic cases reported within a 14-day period
  • Downward trajectory of documented cases within a 14-day period

Hospital Capacity:

  • Treat all patients without crisis care

Testing Capability:

  • Robust testing program in place for at-risk healthcare workers, including emerging antibody testing
  • Downward trajectory of positive tests as a percent of total tests within a 14-day period (flat or increasing volume of tests)

While these guidelines are not mandatory, many states combine these along with other indicators to monitor and help inform reopening plans. North Carolina is following a three-phased approach for reopening.

State Testing Methods

Many states are conducting mitigation testing. According to the Harvard Global Health Institute, mitigation testing is when “the focus is on reducing the spread of the virus through broad testing of symptomatic people, tracing and testing a recommended 10 contacts per new case and isolating positive contacts, and social distancing, mask wearing or stay-at-home orders as necessary.”6 However, the Institute notes that as states reopen, this strategy is ineffective when preventing new outbreaks. According to the Institute, as of August 4, 26 states are not meeting mitigation testing levels.

The Harvard Global Health Institute recommends states move toward suppression testing, which “requires large, proactive testing -- including regular testing of asymptomatic people in high-risk environments such as nursing homes, colleges, and parts of the service industry -- paired with rapid contact tracing and supported isolation (TTSI), as well as other measures.”7 As of August 4, only a handful of states have built the infrastructure to conduct this type of response.

Experts Testing Recommendations: There is a wide range of expert recommendations for testing to ensure a safe reopening. Specific estimates include:

  • University of Minnesota Center for Infectious Disease Research and Policy: Smart Testing-Testing should be guided by local epidemiology of COVID-19 and by resource availability.8
  • American Enterprise Institute: 750,000 per week in conjunction with contact tracing in phase 1, to move to phase 2 the ability of each state to test all people with COVID-19 symptoms and able to conduct active monitoring of confirmed cases and their contacts.9
  • Harvard Global Health Institute: about 1,000,000 a day.10
  • Harvard Center for Ethics and Rockefeller center: Roadmap to pandemic Resilience: 20 million per day.11
  • Paul Romer: test every person every two weeks, which is roughly 25 million tests per day.12

Though increasing substantially over the last two months, new daily testing levels in the U.S. have fallen short of almost all recommended levels:13

  • May 1: 297,568
  • May 15: 360,803
  • June 1: 413,933
  • June 15: 449,488
  • July 1: 621,114
  • August 1: 713,277

Testing gap

Why do we have a testing gap?

Because testing has grown in recent weeks, laboratories are now faced with a backlog leading to slower test results. Currently, the demand for viral tests is surpassing the supply. A recent statement from the American Clinical Laboratory Association (ACLA) said “ACLA member laboratories have seen a steady increase in the volume of COVID-19 test orders. While our members are collectively performing hundreds of thousands of tests each day, the anticipated demand for COVID-19 testing over the coming weeks will likely exceed members’ testing capacities. This significant increase in demand could extend turnaround times for test results… the reality of this ongoing global pandemic is that testing supplies are limited. …. We are in active conversations with the Administration and supply partners about ways to address these challenges.”14 Current shortages include test kits, PPE, chemicals needed for tests, materials needed to perform tests (e.g., cartridges, filter tips, deep well plates, etc.).15

Other Testing Solutions, Challenges and Benefits

Pooled Testing

In pooled testing, batch samples from several people are tested together to identify the overall presence of the virus.16 A positive test indicates that at least one person is positive for the virus, then repeat tests are conducted on all individuals in the batch sample.

  • Pros: Can reduce time and cost of mass testing up to 50%.
  • Cons: The need to retest cases when a batch member tests positive can increase the average time for individual positive identification. Less useful when rates of infection are high and substantial re-testing is required. In addition, pooled testing faces the same accuracy challenges due to the uncertainly in the overall underlying prevalence of infection and potential for testing errors as test are developed.

Environmental mass methods

  • Water testing:17 current research is evaluating the use of waste-water samples to identify infected communities. These data may then be utilized for targeted smart-testing to mitigate community spread.

Ongoing testing challenges

  • Invisible spread: asymptomatic individuals are unlikely to seek testing and so must be identified by contact tracing. Contact tracing capacity is currently insufficient in most areas.
  • Logistics and supply shortages of COVID-19 screening and testing are growing.
  • Accuracy of testing, especially antibody testing, remains uncertain.
  • Reliable and effective contact tracing is necessary for eliminating community spread.

Benefits of widespread testing

There are at least two potential benefits from widespread suppression testing. Most of the potential benefit described above focusses on the direct healthcare and containment consequences of testing. However, there are broader societal and economic benefits as well. A comprehensive testing and contact tracing program that effectively eliminates community spread will provide confidence to the general public that the pandemic is under control. This confidence will lower anxiety about the health risks. Lower anxiety will reduce stress-related ailments and behaviors as well as increase individual’s willingness to undertake non-essential activities outside the home. These non-essential activities include more economic activities (e.g., shopping, entertainment, and travel) as well as social activities (e.g., visiting with friends and relatives). As long as the efficacy of widespread testing is accurately communicated and interpreted, the non-healthcare effects are likely to be positive.


American Clinical Laboratory Association. (2020). ACLA Update on COVID-10 Testing Capacity.
As Coronavirus Surges, How Much Testing Does Your State Need To Subdue The Virus? (2020, June 30). National Public Radio (NPR).
Basu, A., Zinger, T., Inglima, K., Woo, K.-M., Atie, O., Yurasits, L., See, B., & Aguero-Rosenfeld, M. E. (2020). Performance of Abbott ID NOW COVID-19 rapid nucleic acid amplification test in nasopharyngeal swabs transported in viral media and dry nasal swabs, in a New York City academic institution. Journal of Clinical Microbiology.
Center for Disease Control. (2020). Interim Guidelines for COVID-19 Antibody Testing. Retrieved from
Edmond J. Safra Center for Ethics at Harvard University. (2020). Roadmap to Pandemic Resilience.
Gottlieb, S., Rivers, C., McClellan, M. B., Silvis, L., & Watson, C. (2020). National Coronavirus Response (p. 20). American Enterprise Institute.
Harvard Global Health Institute. (2020). July 6, 2020 State Testing Targets.
Kucirka, L., Lauer, S., Laeyendecker, O., Boon, D., & Lessler, J. (2020). Variation in False-Negative Rate of Reverse Transcriptase Polymerase Chain Reaction–Based SARS-CoV-2 Tests by Time Since Exposure. Annals of Internal Medicine.
Lakdawalla, D., Keeler, E., Goldman, D., & Trish, E. (2020). Getting Americans Back to Work (and School) With Pooled Testing. USC Schaeffer.
Romer, Paul. (2020). Roadmap to Responsibly Reopen America.
The COVID Tracking Project. (2020). Our Historical Data. Retrieved from
The White House. (2020). Guidelines Opening Up America Again. Retrieved from
Ulrich, A., Bartkus, J., Moore, K., Hansen, G., Mathieson, M., & Osterholm, M. (2020). Part 3: Smart Testing for COVID-19 Virus and Antibodies. Center for Infectious Disease Research and Policy: University of Minnesota.
Wastewater test could provide early warning of COVID-19. (2020, March 31). ScienceDaily.
Woloshin, S., Patel, N., & Kesslheim, A. (2020). False Negative Tests for SARS-CoV-2 Infection—Challenges and Implications. The New England Journal of Medicine.


Full text of other links:

1 See Center for Disease Control (2020)
2 See Basu et al. (2020)
3 See Kucirka et al. (2020) and Woloshin et al. (2020)
4 See Center for Disease Control (2020)
5 See The White House (2020)
6 See Harvard Global Health Institute (2020)
7 See Harvard Global Health Institute (2020)
8See Ulrich et al. (2020)
9 See Gottlieb et al. (2020)
10 See “As Coronavirus Surges, How Much Testing Does Your State Need To Subdue The Virus?” (2020)
11 See Edmond J. Safra Center for Ethics at Harvard University (2020)
12 See Romer, Paul (2020)
13 See The COVID Tracking Project (2020)
14 See June 27, 2020, statement by American Clinical Laboratory Association (2020)
15 See Ulrich et al. (2020)
16See Lakdawalla et al. (2020)
17 See “Wastewater Test Could Provide Early Warning of COVID-19” (2020)

North Carolina Business Survey

The Kenan Institute of Private Enterprise in conjunction with the CEO Leadership Forum are conducting an ongoing survey of North Carolina executives regarding the challenges their businesses face as a result of the ongoing COVID-19 pandemic. We ask business leaders to provide information on their greatest needs, including from the government.    Survey responses are updated on an ongoing basis and no identifying information is made public.  Respondents represent a wide variety of industries and geographies and many do substantial business outside of North Carolina.

We ask North Carolina business leaders to contribute their insights by completing the survey.  Please contact Ashley Brown, Director of Research Services at the Kenan Institute, for a link.

Business Challenges

Demand shocks due to lockdowns

Most of the respondents note a decrease of demand in services or products due to the economic lockdown. While certain industries have been hit harder than others, there have been substantial dislocations beyond restaurants, entertainment, travel/tourism, and retail.

  • “Customers (I'm B2B) getting skittish about the future and cutting back projects.”
  • “We're seeing lots of frozen budgets and shut down operations. This creates a sub-optimal selling environment.”
  • “0 new clients because the economy is shut down.”

Prolonged Uncertainty for both Virus Spread and Economic Downturn

Respondents note the challenges of planning for the coming year with the uncertainty surrounding the virus response, and state shutdowns.

 “The uncertainty around the depth and duration of the economic downturn makes planning and communication a challenge.”

  • “Trying to assess the pace of change and how that pace will impact business metrics (e.g. revenue, sales, employee engagement).”
  • “The pipeline of business in 2021 is not very clear.”

Keeping Workers and Consumers Safe; Understanding Liabilities

Most of the respondents stress the importance of providing a safe environment for both their employees and customers, but some feel unease around whether they had enough clear information about the best practices to take precautions. Additionally, some respondents indicate that they would like some liability protection if someone gets sick at their business.

  • “Ensuring the safety of our customers and our associates is our top priority and we have put tremendous focus on doing just that. This has been a challenge due to the lack of consistency and clarity around what these measures should be.”
  • “The uncertainty as relates to work policy and the relative compliance legalities associated with returning to work is most troubling. Even our legal counsel and the legal community have limited guidance as to how businesses should proceed. Testing or no testing? Providing flexibility to everyone or only those at-risk or with family members at-risk?  What’s our liability if someone gets sick while at work or working from a client site?  What level of preventive measures and advisories to our associates is sufficient to keep them safe and out of harm’s way?
  • “[Company] has taken extensive steps to protect its associates and customers during the pandemic and businesses now need reasonable liability protection to ensure companies are not subject to abusive litigation.”

Variety of Funding Issues

Companies are facing a variety of funding impacts. For some, the government relief packages, which have largely been aimed at small businesses, has not provided the necessary support often times due to being  ineligible.

  • “Our primary business is supported by governmental funding--both federal as well as state & local. It is anticipated that the [corona virus] and all of its repercussions will affect future levels of funding.”
  • “Limited access to funding because we do not have W2 employees. We have applied to several grants but haven’t gotten any yet.”
  • “Fund raising, which still requires old fashioned physical interaction with clients and prospects, who are already skittish about their own funding and generally about markets, economies and their own businesses.”
  • “Target support for businesses and industries hurting most. “

Recommendations to Government Response

Re-Open the Economy while concurrently fighting the virus.

Many of the respondents indicate the need of reopening the economy while balancing the public health response.  For some, this means more testing and increased transparency in the government’s response to the virus in order to build consumer confidence.

  • “Balance the healthcare emergency and the economic emergency in decision making and in making trade-offs….Communicate clearly what we are doing [to address the healthcare emergency] so that citizens maintain and business supports the virus non-spread protocols. Give reasonable timelines that we may be living with the virus for a relatively long period of time to gain compliance and to not give false hope around a vaccine.  Secure protections for our most vulnerable citizens while allowing the rest of us to get back to work.”
  • “Huge surge in testing and tracking so that we can INTELLIGENTLY get back to business.”
  • “Fund more testing; being clear on the strategy both short- and long-term. “Increased and focused spending - More testing and easy availability of COVID-19 related resources across the board, clearer process and transparency in contact tracing and accelerated support for vaccine creation.”
  • “Support the creation of consumer optimism. Optimism begets the creation of demand and the creation of jobs via consumer spending.  This creation of the demand is what will bring the economy back.  Government payments and stimulus is not a replacement for steady income.”

Uniform Statewide Guidance

Some respondents would like to see more cohesion in the response across various state and local governments, making it easier for companies that operate in several locations and/or simplify needs across the supply chain.

  • “Varying state and local mandates that include disparate restrictions for our brand are challenging to address and unnecessarily distract our business from its overarching goal to support our customers and associates…”

Stop Politicizing the Public Health and Economic Responses  

Some respondents showed frustration that the pandemic response has had political undertones, which is counterproductive to enacting policy that addresses both the public health and economic ramifications of COVID-19.

  • “Stop making it political.”
  • “Create a non-partisan crisis management board with healthcare professionals, business leaders and owners and education professionals that seek solely to inform based upon data."

Additional Resources Needed

Increased Access to Testing and PPE Supplies

To ensure the safety of workers and consumers, businesses need reliable and fast access to both testing, and PPE supplies.

  • “Testing Site Access & Rapid Results - As part of the critical infrastructure, our business would benefit from increased access to facilities that provide rapid testing for our associates so we are not unnecessarily quarantining staff who may have been in contact with infected individuals.”

COVID-19 Resources

For more than 30 years, the Kenan Institute of Private Enterprise has worked to leverage the private sector for the public good. At no time in our history has this mission been more relevant or vital than today. Through press briefings, webinars, op-eds and more, our experts are strengthening our commitment to share academically rigorous and sound research with the public on the business and economic ramifications of COVID-19.

Access Resources


The COVID-19 Decision Dashboard was created to provide real-time and easily digestible data for business leaders and policymakers within the state of North Carolina to make better-informed decisions about the state’s reopening. This project is a partnership between the Kenan Institute of Private Enterprise, UNC Kenan-Flagler Business School and the North Carolina CEO Leadership Forum.

North Carolina CEO Leadership Forum

Mission Statement

The mission of the NC CEO Leadership Forum is to provide private sector leaders with a voice in navigating the complex issues that North Carolina faces in restarting the state’s economy. The work of the forum is non-partisan and data-driven by nature, leveraging a diverse group of business leaders and UNC faculty experts to develop actionable recommendations for the state’s leadership and the business community at large. The ultimate goal of the forum is to promote the health and economic well-being of North Carolina’s citizens and to be a model of public-private cooperation for other states around the country.

CEO Forum Members

DeLisa Alexander
VP and Chief People Officer, RedHat
Leah Wong Ashburn
President/CEO, Family Owner, Highland Brewing
Greg Brown
Executive Director, Sarah Graham Kenan Distinguished Professor of Finance, Kenan Institute of Private Enterprise
Hope Holding Bryant
Vice Chairman, First Citizens Bank
David Carroll
Founder, Carroll Family Holdings
Allen Gant
Chairman, Glen Raven
Meg Ham
President, Food Lion
Edward Holmes
President &amp CEO, Holmes Oil Company
Tim Humphrey
VP, Chief Data Office, IBM
Roddey Dowd, Jr.
CEO, Charlotte Pipe and Foundry
John Kane
Chairman & CEO, Kane Realty
Stan Kelly
President & CEO, Piedmont Triad Partnership
Christian Lundblad
Richard "Dick" Levin Distinguished Professor of Finance, Area Chair of Finance and Associate Dean for the PhD Program, UNC Kenan-Flagler Business School
Hilda Pinnix-Ragland
VP Corporate Public Affairs (retired), Duke Energy
James Rosen
CEO, Artizan Biosciences and Adjunct Professor, UNC Gillings School of Global Public Health
Stoney Sellars
President & CEO, StoneLaurel Consulting
Doug Shackelford
Dean and Meade H. Willis Distinguished Professor of Taxation, UNC Kenan-Flagler Business School
Amit Singh
President & CEO, SpectraForce Technologies
Eric Toone
Executive Managing Director, Breakthrough Energy Ventures
Ed Weisiger
President/CEO, CTE
H.O. Woltz III
Chairman, President, CEO, Insteel