Ask this question, “How much could the 'flu factor' impact private consumption? It would be easy to answer this question with “Possibly as much as 20% for a few months.”
GDP is in the range of $1.2 trillion per month. If we did see a reduction in consumption of 20% over a few months it would translate into a drop in GDP of as much as $500 billion. That reduction would offset the entire 2009 share of the stimulus program. The 2009 flu could have a similar impact on the economy as the drop in consumption that followed 911. That drop in private demand proved temporary. We are much more economically fragile today than we were in 2001.
It will take a long time to evaluate the social consequences of this flu. The economic impacts may be felt more quickly. It is possible that there will be a significant elevation in the flu story in the next 48 hours. For example, a decision to close NYC schools could trigger a nationwide response. The economic effects would spread more quickly than the virus.
On average, 36,000 Americans die each year from the flu. The initial evidence suggests that this flu will not produce more than average fatalities.
It is likely that this flu will not kill us. It may however scare the economy to death.
Your facts are right. Sadly, garden variety influenza kills 100's of thousands worldwide each year; many of these preventable. Yet despite your poor prognosis for the economy, there’s money to be made off the backs of the worried well. We may only be a few weeks into the now pandemic, but the internet is lousy with ads for respirators and anti-viral medications from here and abroad. In the last few hours, an internet search for tamiflu yielded no less than 3.5 million hits. I don’t downplay the potential of this strain, but a lot of unscrupulous people are going to get rich over this.
ReplyDeleteCrikey!
ReplyDeleteAlready in the Dallas area, two elementary schools have been closed.
My seatbelt is fastened.