|Author Name||Willem THORBECKE (Senior Fellow, RIETI)|
|Creation Date/NO.||August 2020 20-E-068|
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The coronavirus crisis has damaged the U.S. economy. This paper uses stock returns on 125 sectors to investigate its impact. It decomposes returns into components driven by sector-specific factors and by macroeconomic factors. Idiosyncratic factors harmed industries such as airlines, aerospace, real estate, tourism, oil, brewers, retail apparel, and funerals. There are thus large swaths of the economy whose recovery depends not on the macroeconomic environment but on controlling the pandemic. Macroeconomic factors generated losses in industries such as production equipment, machinery, and electronic & electrical equipment. Thus reviving capital goods spending requires not just an end to the pandemic but a macroeconomic recovery.