Relationship among state reopening policies, health outcomes and economic recovery through first wave of the COVID-19 pandemic in the U.S.

Abstract

State governments in the U.S. have been facing difficult decisions involving tradeoffs between economic and health-related outcomes during the COVID-19 pandemic. Despite evidence of the effectiveness of government-mandated restrictions mitigating the spread of contagion, these orders are stigmatized due to undesirable economic consequences. This tradeoff resulted in state governments employing mandates at widely different ways. We compare the different policies states implemented during periods of restriction (“lockdown”) and reopening with indicators of COVID-19 spread and consumer card spending at each state during the first “wave” of the pandemic in the U.S. between March and August 2020. We find that while some states enacted reopening decisions when the incidence rate of COVID-19 was minimal or sustained in its relative decline, other states relaxed socioeconomic restrictions near their highest incidence and prevalence rates experienced so far. Nevertheless, all states experienced similar trends in consumer card spending recovery, which was strongly correlated with reopening policies following the lockdowns and relatively independent from COVID-19 incidence rates at the time. Our findings suggest that consumer card spending patterns can be attributed to government mandates rather than COVID-19 incidence in the states. We estimate the recovery in states that reopened in late April was more than the recovery in states that did not reopen in the same period– 15% for consumer card spending and 18% for spending by high income households. This result highlights the important role of state policies in minimizing health impacts while promoting economic recovery and helps planning effective interventions in subsequent waves and immunization efforts.