Energy and the Economy

Abstract

With many of the most timely measures of economic activity lagging behind the fast moving changes in the U.S. economy, one source of extremely timely data is energy use. Energy use is not only tied to the weather as we heat and cool our homes; it is also tied to economic output as firms power their production facilities and establishments open for business and provide services. In this issue of PERCspectives on Policy, authors Dennis W. Jansen and Andrew J. Rettenmaier estimate the degree to which energy demand has changed from January 2017 to March 15, 2020, while taking into account the various dates that stay-at-home orders went into effect. By using data from the Energy Information Administration and controlling for weather conditions, the authors compare the actual and predicted use of energy, present the percent deviation between actual and predicted energy use, and show the decline in energy use relative to the insured unemployment rate for selected states and regions in the U.S. Results indicate that energy use has dropped markedly relative to expected use since the stay-at-home orders have been in place.