Mar 29, 2007 (CIDRAP Source Weekly Briefing) – A severe influenza pandemic could cost the United States $683 billion and plunge the American economy into the second-deepest recession since World War II, a nonprofit health advocacy group warned on Mar 22.
If rates of illness and death match those of the great pandemic of 1918—when one third of the population fell ill and 2.5% of those who were sickened died—US production of goods and services could shrink 5.5% in a year, according to an analysis released by the Trust for America's Health (TFAH).
States whose economies depend on tourism and entertainment would be hit hardest, with losses as large as 8% of their economic production, the group said. But areas that depend on sectors such as agriculture and finance might hold their losses to half that much, according to the report, "Pandemic Flu and Potential for US Economic Recession."
"Businesses, governments, schools, and other sectors could all face serious disruptions," said Jeff Levi, PhD, executive director of the TFAH, a Washington, DC–based nonpartisan group that has published several reports on pandemic preparedness.
The report relies on the economic models and assumptions made by the Congressional Budget Office, the Australian National University, and BMO Nesbitt Burns Cooper, a Canadian investment firm. It combines predictions of death rates and loss of productivity with estimates of the impact on 20 different business sectors.
Demand for arts, entertainment, and recreation is likely to drop by 80%, the report estimates, compared with 67% for transportation and warehousing and 10% for agriculture, mining, construction, manufacturing, finance, and education.
It is the first pandemic economic forecast to break down potential impact by state, Levi said. The hardest-hit states are likely to be those whose economies rely on entertainment, tourism, and food service, the report says. Nevada would fare the worst, followed by Hawaii, Alaska, Wyoming, and Nebraska.
The states at the lowest risk of major losses would be those with diverse economies, as well as those that depend on the services most likely to be in use during a pandemic, such as healthcare and government. Leading the list of least-affected places are Washington, DC, Maryland, Virginia, New York, and Massachusetts.
The TFAH recommends a menu of actions to mitigate a pandemic's economic impact, from improving state pandemic plans to encouraging continuity planning for business sectors as well as individual businesses.
—Based on reporting by Maryn McKenna
Comments from the Editor-in-Chief:
There are a number of ways to measure the impact of the next pandemic, such as the number of deaths, illnesses, and hospitalizations; worker absenteeism; and the number of flights cancelled at a given airport. Obviously, human illness and death are the most meaningful markers.
But the direct and indirect economic costs of the next pandemic are also critical considerations in assessing its impact and for establishing some sense of priority for our preparedness efforts, both in the private and public sectors. The reality is that businesses today must weigh the costs of preventing and preparing for bad things to happen against both their economic impact and their potential to harm employees and their families. I will be the first to admit, though, that I often get lost in some of these complicated economic models detailing the costs of catastrophic events. I can't tell if they make real sense or not.
But the report from the TFAH was clear and compelling to even a noneconomist like me. The disease-occurrence assumptions made in the report seemed very reasonable from an epidemiologic and public health perspective. The analysis of sector-by-sector pandemic impact may not be quite right—like how many crops will we plant and harvest if petroleum is in short supply. But the general sense of what could happen is straightforward.
Bottom line for business: If you are part of your company's pandemic preparedness team (even if you are the only one), get very familiar with these data and use them to make your case as to why a substantial investment in preparedness is as smart as buying appropriate insurance for your company's buildings. With fire insurance, you hope that you'll never have to use it even if you pay 50 years' worth of premiums. With pandemic preparedness, there's a key difference: There will be another pandemic.
Your investment in preparedness will never be wasted, even if the pandemic is not as severe as the one in 1918. Make sure your boss reads this report—or at least its summary. It's a critical tool for your pandemic preparedness toolbox.
—Michael Osterholm
