Sectoral digital intensity and GDP growth after a large employment shock: A simple extrapolation exercise.

We introduce a state-dependent algorithm with minimal data requirements for predicting output dynamics as a function of employment across industries and locations. The method generalizes insights of Okun (1963) by leveraging measures of industry heterogeneity. We use the algorithm to examine gross domestic product (GDP) dynamics following the COVID-19 pandemic of 2020, delivering informative projections of aggregate and sectoral output.