Working Papers

2021-09 | February 2021


The Impact of COVID on Potential Output

Author(s): John Fernald and Huiyu Li

The level of potential output is likely to be subdued post-COVID relative to its previous estimates. Most clearly, capital input and full-employment labor will both be lower than they previously were. Quantitatively, however, these effects appear relatively modest. In the long run, labor scarring could lead to lower levels of employment, but the slow pre-recession pace of GDP growth is unlikely to be substantially affected.

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Article Citation

Fernald, John, and Huiyu Li. 2021. "The Impact of COVID on Potential Output," Federal Reserve Bank of San Francisco Working Paper 2021-09. Available at