# 583
During my travels over the past week I managed to access the net a few times at dialup speed, and was aware of the media accounts on the report issued by The Trust for America's Health (TFAH) on the economic impact of a severe pandemic, but was unable to read the source document while on the road.
The numbers presented in the news paper accounts were grim, but not excessively so. A 5.5% contraction in the economy, and `the second worst recession since World War II".
I've now had time to briefly glance over the pdf file and while I see it, along with other studies, warning of the dire economic impact of a pandemic as being useful, I'm not terribly confident in their numbers.
The PDF File (1.7mb) can be downloaded here.
This report is, I'm sure, a scholarly and reasonable assessment of the impact of a pandemic based on certain assumptions, and if those assumptions prove correct, their projections may very well be in line.
The problem I see comes from the assumptions.
The first assumption is that a `severe' pandemic would be on the order of the 1918 Spanish Flu. True enough, it was as bad as we've seen to date, and can rightly be called `severe' when compared to 1957 or 1968, but there is no guarantee that the next pandemic will not exceed that event in its attack rate or CFR (Case Fatality Ratio).
Their assumption is a severe pandemic will sicken 30% of the population, claim the lives of 2.5% of those afflicted, and come in 2 or 3 waves of 6 to 8 weeks each. They also assume that those infected, but that survive, will be `out sick' for 3 weeks.
Given that the H5N1 virus has killed in excess of 60% of those infected, assuming a 2.5% fatality rate would seem a bit optimistic.
The attack rate is anyone's guess, and everyone seems to be relying on the 1918 number even though there is some thought that a previous pandemic may have conferred some immunity to the people of that era.
Simply put, the attack rate of a novel virus is unknown. It could well be only 30%, but could just as easily be 50% or 60% or more.
Admittedly, they had to pick some base numbers, and these were handy. They are the ones bandied about by various government organizations for a couple of years as a `worst-case' scenario. But many scientists have suggested the 1918 model isn't the worst case, it's just the worst we've seen in recent history.
Another assumption I have difficulty with is the notion that anyone sickened by the pandemic would be back to work in 3 weeks. This doesn't jive with what we've seen to date with H5N1 infections.
Even during the 1918 pandemic many people were sickened and unable to work for 6 weeks or longer. And there are anecdotal reports of a significant percentage of victims who suffered long-term disability from their bout with the Spanish Lady.
Many patients infected with the H5N1 virus today that have survived have only done so after a month or longer in intensive care, receiving extensive, and often heroic medical treatments. The assumption that the H5N1 virus is just `another, albeit severe, flu' appears to be in doubt.
All of the assumptions listed so far assume the virus will lose a good deal of its lethality if it becomes a pandemic strain.
Certainly, something to hope for. But by no means certain to happen.
And despite the constant reiteration of the `wave' theory, that a pandemic will arrive in 2 or 3 waves that last 6 to 8 weeks, occurring over an 18 month period, once again this is simply a guess based primarily on the 1918 experience.
The idea, apparently, is that a pandemic will only affect each locality for roughly 3 months out of its 18 month run. That things will return to normalcy in between waves.
Maybe that's true. But it is difficult for me to automatically accept that the dynamics of a pandemic today would be the same as they were nearly 90 years ago, before the advent of commercial air travel.
In fairness, the report does address these issues. They admit that their numbers may be conservative, and that not all experts agree on the assumptions utilized.
The study makes some additional assumptions that I find a bit hard to reconcile.
The first being that the health care community will experience a 15% increase in demand during a pandemic.
My first reaction was Huh?
Here in Florida, they are conservatively estimating 10% of all pandemic victims will need hospitalization. That's 600,000 people. Supposedly this represents the `sickest of the sick', many of which will require extraordinary measures to treat.
Nationwide, the Federal government is anticipating 9 million hospitalizations (10%). Given that nearly 100% of all known H5N1 victims have required hospital care, this 10% number may be low. It may, however, represent the maximum number that could be cared for, regardless of how many actually need hospital care.
Of course, if the number of health care workers that actually report for work are as low as some surveys have indicated (20%), then I suppose it is possible we could see a negative impact on health care costs.
Another assumption that jumped out at me was the 0% impact on real estate sales.
Now, I'm not an economist, but I am a licensed building contractor (and the son of a contractor), and a licensed mortgage broker, and I've weathered several major downturns in the housing market. I've seen how quickly things can turn sour in the housing market when the economy hits even a minor blip.
I have real doubts that during a time when millions of people are dying from influenza (even at the 2.5% CFR), businesses are shutting down, people are out of work and falling behind in their bills, and we are in the midst of the `2nd worst recession' since World War II, that housing starts, and sales will continue as normal.
Here in Florida, where this report states there will be zero impact on real estate sales and rentals, the majority of homes are sold during the winter tourist season, and most of the rentals are seasonal as well. Will our annual influx of snowbirds go on as usual during a pandemic?
Somehow, I doubt it.
Even if all of the other assumptions contained in the report are dead on, and we see only a 5.5% contraction of the economy, how this would fail to affect the real estate market baffles me. The last thing people are going to be thinking about during a pandemic /recession will be buying big ticket items like cars, houses, and big screen TV's.
There is a truism in computer programming and modeling. GIGO. Garbage In, Garbage Out. Much of this study is predicated on the premise that the numbers provided by the CBO (Congressional Budget Office) will hold up in a pandemic.
Despite my reservations, I will give Kudos to TFAH for their efforts to raise awareness of the economic impact of a pandemic. They've certainly caught the attention of the media, and hopefully the populace.
But if we have a truly severe pandemic, and see only a 5.5% reduction in GNP, in my opinion, we will have dodged a major bullet.
