Goldman Sachs says national mask mandate could save US from a 5% hit to GDP

Goldman's baseline estimate is that a national mandate could raise the percentage of people who wear masks by 15 percentage points and cut the daily growth rate of confirmed cases by 1 percentage point to 0.6%.
That could save the US from a 5% hit to gross domestic product that could result from renewed lockdowns, according to Goldman Sachs.
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A national mask mandate could potentially slash coronavirus infections in the US and save the country from a 5% hit to its gross domestic product, according to Goldman Sachs.

In a Monday note, chief economist Jan Hatzius and his team investigated the link between wearing a mask and certain economic and health outcomes of COVID-19.

"We find that face masks are associated with significantly better coronavirus outcomes," Hatzius wrote. Face mask use lowered infection growth rates and death rates, the team found. The causal relationship was not weakened when controlling for avoiding large gatherings or avoiding public interactions.

A national mandate would also "likely increase face mask usage meaningfully," Goldman found. Goldman's baseline estimate is that a national mandate could increase the percentage of people who wear masks by 15 percentage points, and cut the daily growth rate of confirmed cases by 1 percentage point to 0.6%.

"These calculations imply that a face mask mandate could potentially substitute for lockdowns that would otherwise subtract nearly 5% from GDP," said Hatzius.

The US currently does not mandate mask wearing instead, it issued a national recommendation in April . While some states adopted stricter measures , some such as Texas and Florida opposed a state-wide mask mandate.

By analyzing state-level mask usage, Goldman found that mandates gradually raise the percentage of people who "always" or "frequently" wear masks by 25 percentage points in the 30 days after signing.

In addition, the percent of people who say they "always" wear a mask jumped by nearly 40 percentage points more than 30 days after signing, "reflecting some people switching from 'frequently' and other categories to 'always'," according to the note.

The US fell into a recession in February due to the impact of coronavirus, which has had a huge negative impact on gross domestic product. US GDP fell nearly 5% in the first quarter of 2020, and is estimated to slump more than 30% in the second quarter due to the pandemic.

To determine how a mask mandate would impact US GDP, Goldman considered how severe government lockdowns would have to be to have the same outcome lowering infections by 1 percentage point.

They found that their effective lockdown index would have to increase 16 percentage points to lower infections 1 point. This jump might reduce US GDP by nearly 5%, according to the note.

And, even taking into account any uncertainty in Goldman's analysis, it "suggests that the economic benefit from a face mask mandate and increased face mask usage could be sizable," he said.

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