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https://www.ncbi.nlm.nih.gov/m/pubmed/10511522/">https://www.ncbi.nlm.nih.gov/m/pubmed/... this paper (written in 1999) estimates the impact on the US economy of $71.3-$166.5 bn for an influenza epidemic that led to just 314k-734k hospitalizations, 18-42 mil outpatient visits, and 89k-207k deaths. This does not include impacts to industry.
Since 1999, the price of healthcare has doubled. US GDP is $21.44 trillion. We are talking about a .6%-1.5% impact just from healthcare costs. As for economic costs, in a typical year 111 million workdays are lost due to the flu ($7 bn). That implies $63 of productivity/day.
In a scenario where 30 million people get sick, and miss an average of 15 work days, the productivity impact would be $28 billion. Travel during pandemics generally slows by at least 40% (see MERS). The US travel industry accounts for $100 bn/month. That’s another $40 bn/month.
Add that to a general decline in spending when people are sick, and a mild pandemic lasting 2 months could conservatively cost the US 2%-4% of annual GDP. In a given quarter, that’s 8%-16%. The impacts in cities would almost certainly be higher.
That kind of shock would almost certainly have lasting effects on growth beyond the term of the pandemic, especially when considering the global ramifications of such an event (travel and global business especially).
Ask yourself, how much would the stock market decline in such a scenario? How many companies risk default? Now ask yourself what the odds are of the Wuhan virus having at least this much of an impact on the US and global economies. Theyre material, and that alone is terrifying.
I think it’s time to revisit this thread. Things are much worse than I ever thought they would be: deaths approaching 100k, travel down 99%, consumer spending down double digits. Long term, even as some of these things bounce back, the impact on global travel will be larger...
Than I ever thought. The impact on the global economy larger than I thought. The one thing I didn’t properly consider at the time was whether the fed would come in with a milkshake or monetary stimulus that would bail out the stock market. LT, that probably won’t matter.
We still need the real economy to recover and see no ill effects from the massive deficit we are building and stock market bubble we are forming. Companies still aren’t issuing equity. That will change if this downturn continues. There’s a lot of demand pushing up prices...
But what happens if supply matches that demand plus some? Prices go down, confidence is lost, and prices go down more. It might take time, it might take a long time, but eventually the underlying economic reality of the situation will be reflected in the pricing of risk assets.
