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Regulation and Compliance > State Regulation

Goldman Sachs: Face Mask Mandate Could Boost U.S. GDP by 5%

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For all those worried about another round of lockdowns due to the rising number of coronavirus infections in many states and their negative economic impacts, Goldman Sachs offers a solution: a national face mask mandate.

Such a mandate would sharply slow the COVID-19 infection rate and potentially boost U.S. GDP about 5% by preventing further lockdowns, according to new research from the firm.

“The economic benefit from a face mask mandate and increased face mask usage could be sizable,” according to the report written by Goldman Sachs economists led by Chief Economist Jan Hatzius.

The U.S., unlike many European and Asian countries, does not require people to wear face masks during the pandemic. Nor is face mask-wearing the norm here, as it is in China, South Korea and Japan. Face mask policies, like those concerning testing and tracing, are set by individual states. 

As of Tuesday, 36 states saw increases in daily coronavirus cases over the past week, including Arizona, Florida and Texas, which experienced sharp increases, according to Johns Hopkins data. As a result, those three states and others — including even New Jersey, where new cases are declining — have retreated from some reopening plans.

What Goldman Sachs Analysts Found

Goldman Sachs economists studied the potential impact of a face mask mandate on the 32 states that don’t already have one — they account for 40% of all confirmed COVID-19 cases and two-thirds of new infections — and on the 20 states and Washington, DC, that do.

They found that such a requirement would increase face mask usage in both groups of states and could lower the daily growth rate of infections for both — from 2.9% to just over 1% in the states that don’t have a mandate and from 0.8-0.9% to 0.4-0.5% in states that do.

Combining both estimates, the economists estimated that a national face mask mandate could cut the national average growth rate of infections to 0.6-0.7%.

If there were no such mandate, lockdowns would have to increase in order to equal that same drop in infections. Those lockdowns, in turn, could cut GDP by almost 5%, according to the Goldman Sachs analysts.

They caution that their estimate is “quite uncertain” because it is based on a number of statistical relationships that contain a degree of error but despite that uncertainty, a natural face mask mandate could have a sizable economic benefit.

In the meantime, state and local authorities might consider adopting their own face mask mandate that could ultimately mimic the impact of a national one, the analysts conclude.

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