the probable cost of swine flu

so what would a mild swine flu pandemic cost?
we get out the envelope...

best case is about 1% hit to GDP this year

so far on the swine 'flu we know:

it is a new type A influenze variant

probably essentially no one has immunity to it

it seems to spread rapidly and easily and be past where it can be contained

it might fizzle due to summer coming, or spread global in the next 2-6 weeks

it might come back next winter, possibly more virulent, or not

the fatality ratio, so far, does not seem any worse than "regular 'flu" - under 1%, and probably consistent with few percent of the seriously sick (pneumonia or respiratory distress requiring hospitalization) not recovering

it may hit healthy adults harder than very young/very old, it probably hits the already sick very hard, we don't know yet what it might do to immunecompromised or populations with widespread secondary infections

but - the zeroth order estimate is that a lot of people will get it, because of lack of immunity and easy rapid spread, but most people will only get a mild case with < 1% dying.

So... this suggest, to zeroth order:

order 100 million cases in US, maybe 2 billion worldwide - in the next 12 months even

less than million deaths in US, so a noticeable blip in the death rate
maybe tens of millions dead worldwide, again not more than doubling the death rate

if it hits healthy adults disproportionally, that is a one time ~ $ trillion hit to the US economy, but that is the integrated current economic cost
immediate cost would be < 1% GDP hit from the fatalities

similar cost worldwide

if 100 million people get sick for a week (a `mild' case is likely to leave people too sick to work for order 1 week - some for less time, some for 2-3 weeks)
this is about 2% loss of productivity, for about 1/3 of the people
or another fraction of 1% loss to GDP

so, in round numbers, a mild pandemic would cost the US about 1% of its GDP,
or $100-200 billion or so

that is probably the best likely scenario now, though the virus could always just fizzle.

A bad scenario - a 1918 level pandemic with millions of fatalities - would knock the economy back about 5-10% short term, bad enough, but near catastrophic given a background recession with 6% current decline

people can run more precise macroeconomic models, but they won't be more accurate at this stage

this of course does not count the emotional or demographic cost, the social dislocation or the effect on the psyche - that is hard