Covid-19 uncertainty to have long-lasting impact – SF Fed paper

The uncertainty created by the coronavirus is likely to weigh on the US economy persistently, depressing economic activity and inflation over the medium term, researchers from the Federal Reserve Bank of San Francisco find.

Using experience of past shocks to uncertainty, Sylvain Leduc and Zheng Liu estimate that inflation could fall into negative territory.

Leduc and Liu compare the recent increase in uncertainty due to Covid-19-induced economic fallout to past events that triggered large and