COVID-19 RESOURCES AND INFORMATION: See the Atlanta Fed's list of publications, information, and resources; listen to our Pandemic Response webinar series.


The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.

Comment Standards:
Comments are moderated and will not appear until the moderator has approved them.

Please submit appropriate comments. Inappropriate comments include content that is abusive, harassing, or threatening; obscene, vulgar, or profane; an attack of a personal nature; or overtly political.

In addition, no off-topic remarks or spam is permitted.

May 28, 2020

Firms Expect Working from Home to Triple

The coronavirus and efforts to mitigate its impact are having a transformative impact on many aspects of economic life, intensifying trends like shopping online rather than visiting brick-and-mortar stores and increasing the incidence of working from home. Indeed, many tech giants have already made working from home a permanent option for employees.

Working from home, or telecommuting, is not a new phenomenon. According to a survey by the U.S. Bureau of Labor Statistics (BLS), around 8 percent of all employees worked from home at least one day a week before the arrival of COVID-19. However, only 2.5 percent worked from home full-time in the 2017–18 survey period.

Working from home has surged in the wake of social distancing and other efforts to contain the virus, and this surge brings up a good question: How many jobs can be done at home? Some careful research by Jonathan Dingel and Brent Neiman indicates that nearly 40 percent of U.S. jobs can be done at home.

While this provides an upper bound, can does not mean will, so a natural follow-up question is: How many jobs willbe done at home? To get a sense of how many jobs and how many working days will beperformedat home after the pandemic recedes, we turn to our Survey of Business Uncertainty (SBU). To preview our conclusion, the share of working days spent at home is expected to triple after the COVID-19 crisis ends compared to before the pandemic hit, but with considerable variation across industries.

In the May SBU, we asked two questions to gauge how firms anticipate working from home to change. To get a pre-pandemic starting point, we asked panelists, "What percentage of your full-time employees worked from home in 2019?" And to gauge how that's likely to change after the crisis ends, we asked, "What percentage of your full-time employees will work from home after the coronavirus pandemic?" We asked firms to sort the fraction of their full-time workforce into four categories, ranging from those employees working from home five full days per week to those who rarely or never work from home.

Chart 1 summarizes firms' responses to these two questions. It also summarizes the responses by workers to questions about working from home in the BLS's 2017–18 American Time Use Survey. For the period preceding COVID-19, SBU results and the Time Use Survey results are remarkably similar. Both surveys say 90 percent of employees rarely or never worked from home, and a very small fraction worked from home five full days per week. As reported in the chart's rightmost column, about 5 to 6 percent of all working days happened at home before the pandemic hit.

Chart 1: Working From Home, Pre- and Post-COVID

According to the SBU results, the anticipated share of working days at home is set to triple after the pandemic ends—rising from 5.5 percent to 16.6 percent of all working days. Perhaps even more striking, firms anticipate that 10 percent of their full-time workforce will be working from home five days a week.

Overall, firms say that about 10 percent of their full-time employees worked from home at least one day a week in 2019. That fraction is expected to jump to nearly 30 percent after the crisis ends (well below the upper bound estimated by Dingel and Neiman). Chart 2 gives a look at firm's working-from-home expectations for major industry groups.

Chart 2: Working From Home at Least One Full Day Per Week, Pre- and Post-COVID, by Industry

The share of people working from home at least one day a week is expected to jump markedly in the construction, real estate, and mining and utilities sectors, presumably by granting front-office staff working-from-home status. It is also expected to jump markedly in health care, education, leisure and hospitality, and other services, possibly by relying more heavily on remote-delivery options (for example, online education and virtual doctor's visits). Firms in the business services sector anticipate that working from home will rise to nearly 45 percent.

For the industries we can match directly to American Time Use Survey statistics, the two data sources imply a similar incidence of working from home before COVID-19. For manufacturing, SBU data indicate that 9 percent of employees worked at home at least one day a week prior to COVID-19, and the American Time Use Survey indicates that 7.3 percent did so. For retail and wholesale trade, the corresponding figures are 4.1 percent and 4.0 percent, respectively.

To summarize, our survey indicates that, compared to before the pandemic, the share of working days spent at home by full-time workers will triple after the pandemic. Our results also say that this shift will happen across major industry sectors. These changes in the location of work are also likely to exert powerful effects on the future of cities and the demand for high-rise office space (more on that next month).

Regarding the long-run impact of the shift to working from home, there are grounds for optimism, including a potential boost to productivity—although if you're juggling kids at home and working from your couch or bedroom, we can understand if it's hard to imagine right now.


May 27, 2020

COVID-19 Mortgage Relief—The Role of Income Support

The COVID-19 pandemic has led to a large number of furloughs, layoffs, reductions in hours worked, and wage cuts. Anticipating that many homeowners would consequently have problems paying their monthly mortgage bill, the U.S. Department of Housing and Urban Development ordered all mortgage servicers of federally backed debt to provide forbearance to any homeowners affected by the crisis. In addition, bank regulators encouraged lenders to forbear and restructure mortgages for borrowers affected by the shutdown, actions that staved off an immediate wave of foreclosures. At the end of the forbearance window, borrowers will likely be offered a series of repayment schemes: starting with a period of catch-up payments, then moving to extended terms on their mortgage or possibly even rate reductions. However, if the borrower has not returned to work, paying for what is effectively a new mortgage obviously poses a challenge. Options such as creating a modified repayment plan, lowering the mortgage interest rate, or extending the term of the loan might not be enough for a borrower who has experienced a substantial income loss.

In 2009, researchers at the Boston Fed proposed an alternative policy of supplemental mortgage payment assistance targeted to underwater borrowers experiencing a significant reduction in disposable income due to factors such as employment loss or medical costs associated with illness. That 2009 research built on earlier Boston Fed research demonstrating that—during a previous housing market downturn—most underwater households continued to pay their mortgages unless they were hit with a further reduction in earnings or increase in expenses. The idea that mortgage default is caused by both a negative house price shock and a negative income/employment shock is known as the "double trigger" theory of default. However, the empirical evidence on the double trigger theory was limited. Underwater homeowners in areas with increased unemployment appeared to default more, but this was mostly an interesting correlation, not necessarily a causal relationship.

Since the Great Recession, considerable research (here, for example) has tried to identify the central role income shocks play in default. The econometric challenge is that shocks to income from changes in employment or wages tend to be capitalized into house prices. So a community experiencing the second trigger from widespread job loss, say, will likely also experience a drop in house prices, making it difficult to isolate the real cause of default. In a forthcoming paper we consider the unique sources of changes in employment and income arising from the hydraulic fracking boom in Pennsylvania in the late 2000s to isolate the second trigger from the first.

Fracking involves injecting large amounts of water, sand, and potentially toxic chemicals underground at great pressure to break shale formations and release the trapped natural gas. The fracking process also involves piercing aquifers, storing and treating large quantities of contaminated water, and employing heavy equipment. Some evidence shows that these real or perceived negative features lower the value of homes near fracking wells. At the same time, the shale boom increased demand for middle- and low-skilled workers and generated significant royalty payments to many property owners.

Observing the performance of mortgages that originated before fracking began allows us to treat the resulting shale boom as an experiment where household incomes were sustained (or increased) even as housing prices were flat or declining. Using geological information to predict the location of fracking activity, we find that fracking wells significantly raised total household income, from both wages and royalties, and the wells appear to have increased employment in fracking-related industries. At the same time, fracking does not appear to have raised house prices or made it less likely that a household has negative equity. However, fracking does significantly reduce the probability that a mortgage becomes seriously delinquent (that is, when a borrower misses more than a few payments).

In addition, when we use only geology to predict the location of fracking wells, we get a much larger decline in mortgage delinquency, suggesting that more vulnerable communities were quicker to embrace fracking. Finally, the ameliorative effects of fracking were concentrated among borrowers who are likely to be underwater on their mortgages (the first trigger), consistent with the double trigger hypothesis, since the theory predicts that borrowers with positive equity are unlikely to default in the first place.

Our results suggest that an effective strategy for preventing a foreclosure crisis in the current situation is direct support of household income. Indeed, the Coronavirus Aid, Relief, and Economic Security Act (commonly known as the CARES Act) contains several income transfers to help sustain household budgets, including expanded unemployment insurance, direct cash payments to most households, and loans to small firms that are forgivable on the condition that they sustain employment through the shutdown. It is our view that these programs are not simply helping to sustain families during the crisis, but they're also limiting disruption to the housing market. Depending on how the crisis evolves in the coming months, further income support for affected households may forestall the need for less efficacious interventions to aid distressed borrowers.

May 18, 2020

A Couple of Insights from the April Current Population Survey

The latest reading of the Atlanta Fed’s Wage Growth Tracker indicates that wage growth is slowing. It came in at 3.3 percent for April, down from 3.5 percent in March and 3.7 percent in February. This slowing primarily reflects the relatively large decline in the employment of those who typically experience the fastest wage growth: young workers. In February, those aged 16–24 accounted for about 12 percent of employment. By April, that share had dropped to under 10 percent. This change has significant bearing on the Wage Growth Tracker because those aged 16–24 had median wage growth of around 7.8 percent on average over the last year, versus 3.6 percent for all workers. So their decreased share of employment has helped pull overall median wage growth lower (see here for more discussion).

Note that while the tracker reflects the compositional change in who is employed, it didn’t show a spike in wage growth suggested by the average hourly earnings data from the Bureau of Labor Statistics' Payroll Survey. This is because the average hourly earnings data are a snapshot of the average earnings of all workers, hence last year's average will include people who are not employed today (and vice versa). As a result, the spike in average earnings was for an awful reason: a lot of low-wage workers lost their jobs. In contrast, the tracker compares the wages of the fortunate people who were employed both today and a year earlier.

Another wage development to keep an eye on are wage freezes. During the Great Recession, there was a large and persistent increase in the fraction of workers who said their wage was unchanged from a year earlier. We will be examining the Wage Growth Tracker data for evidence of an increased incidence of wage freezes or even wage cuts. The fraction of people reporting no change in their wage has increased from 13.7 percent in February to 14.1 percent in April. In contrast, the cyclical low for this series was 12.7 percent in November of 2019.

The April data also revealed a sharp increase in the number of people who are employed but on unpaid absence from work for "other reasons." As described in this recent macroblog post, these are most likely people whose employers furloughed them. March saw an estimated 1.5 million such workers. In April, that number swelled to 6.2 million. If those people had been counted as unemployed instead of employed, the unemployment rate would have been 18.7 percent in April instead of the official number of 14.7 percent. Going forward, a gauge of the strength of the labor market recovery will be how many of these furloughed workers eventually return to work versus become unemployed—or even leave the labor force. Stay tuned.

John Robertson, a senior policy adviser in the Atlanta Fed's research department

May 15, 2020

Introducing the CFO Survey

For almost 25 years, the Duke CFO Global Business Outlook has provided policymakers, academics, and the public with an understanding of how financial executives view the economy and prospects for their business. Today, three partners—Duke University's Fuqua School of Business, the Federal Reserve Bank of Richmond, and the Federal Reserve Bank of Atlanta—announce an enhanced iteration of this survey, now called theCFO Survey. Starting with the second-quarter data release on July 8, 2020, the CFO Survey will offer the same crucial information about the economic outlook and, through some methodological updates, an enhanced look at how U.S. companies perceive and react to the current economic environment.

This partnership comes at an opportune time. As the country faces considerable economic and political uncertainty, the on-the-ground information policymakers receive from businesses has never been more important. In the longer run, the information collected through the CFO Survey will help economists and researchers understand how firms reacted amid the COVID-19 pandemic and its economic consequences. It will therefore provide a key input into our understanding of the role that sentiment and uncertainty play in corporate decision-making processes.

What will change?

Much of the Duke survey will remain the same. One change is a discontinuation of the international portion. The CFO Survey will initially survey only U.S. firms, to fully establish the U.S. panel. (After we've reached our domestic panel-composition goals, we hope to eventually engage our global partners again.) Another change is that the sampling design has moved from a repeated cross-section to a panel-data format, meaning that the same pool of business leaders will participate each quarter. Finally, the team engaged in a thorough methodological review, and the survey questions will be streamlined and the survey process made more efficient for participants. More details on changes to existing questions will be available over the course of the next few weeks, and the first set of data generated using the updated questionnaire design will be available on July 8 on the new CFO Survey website:

What will stay the same?

The survey will continue to track business sentiment over time and ask questions pertaining to business leaders' most pressing concerns, their expectations for their own firms' performance, and their expectations for the performance of the U.S. economy over the year ahead. Because Duke has conducted this survey since 1996, the rich historical data will allow for contextual insights on key indicators including revenue, capital expenditures, and employment as well as illuminating trends and shifts in business sentiment. The headline CFO Optimism Index will remain unchanged—that index measures business leaders' optimism about the U.S. economy and their own firm's financial prospects.

The objectives of the survey will not change, nor will the target participants. In addition to chief financial officers, the CFO Survey panel includes treasurers, vice presidents, and directors of finance, owner-operators, accountants, controllers, and others with financial decision-making roles in their organizations. To get the broadest view possible, the CFO Survey panel includes representatives from firms that range in size from owner-operators to Fortune 500 companies and covers all major industries. Finally, the survey will remain quarterly, and aggregated survey results and analysis will be publicly available via the new CFO Survey website.

We are excited to continue to provide this valuable complement to the array of existing data available to policymakers, business decision-makers, academic researchers, and the public. For more information and for the new quarterly results, check on July 8, 2020. Of course, we'll also alert you here when the time comes!

John Graham, the D. Richard Mead Jr. Family Professor of Finance at Duke University's Fuqua School of Business,

Brent Meyer, a policy adviser and economist in the Atlanta Fed's Research Department,

Nicholas Parker, the Atlanta Fed's director of surveys, and

Sonya Ravindranath Waddell, a vice president and economist at the Federal Reserve Bank of Richmond