Biden, Swine Flu and the Economy

Just how bad might the damage be?

By SHARE

Let's says the Biden Scenario is acccurate. Let's say we should be avoiding public places because of the swine flu. What is the economic impact of a pandemic that requires such measures? IHS Global Insight has run the numbers on Captain Trips:

Scenario One. "In an epidemic (roughly 75 million infected in the United States and 100,000 fatalities), the supply and demand effects cut less than 0.5% off the growth rate of real GDP and last less than a year.  The impact in emerging markets would likely be two to three times as big."

Scenario Two: "In a more serious epidemic – or pandemic – with fatalities four to five times higher, the impact on real GDP growth in developed economies would be more like -2% to -3%.  In the case of the United States, this could mean a growth rate of -4% to -5% in 2009 and an even bigger rise in the unemployment rate. For poorer countries, which are less able to cope with such an outbreak, the impact would be devastating, and produce downturns of depression-like proportions."