Will Coronavirus Cause a Recession?

Coronavirus may be coming for your health and your wallet. But how bad is it, really?
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I’m scared too.

As coronavirus spreads, I spent this past week imagining the worst. I tried not panic every time my wife coughed. I checked death tolls, then my life insurance policy. We have extra rice and peanut butter now, impulse buys in case of food shortages here in Boston.

The worst-case scenario feels that urgent, with the CDC warning that it can no longer contain COVID-19 in the U.S. The WHO has announced that this virus will become a pandemic, while schools begin to close and airlines cancel flights.

It’s not just about health either. The coronavirus has prompted fears about the economy at every level. Stocks have plunged twice in one week, and analysts are warning about a coronavirus recession. Layoffs have already begun in China, where the virus originated.

At the heart of this fear is, largely, one number: 3.4%. Globally, according to the WHO, “about 3.4% of reported COVID-19 cases have died.” How could we not be scared?

By understanding that there’s a lot more to that number.

We Don’t Know the Real Number

To put it mildly, there’s a lot we don’t know about the coronavirus. When it comes to understanding the mortality rate, one of the most important pieces of information is the “denominator.” That is, compared against the number of people who have died because of this illness, how many people actually have it?

More than 3,200 people have died out of 95,000 coronavirus cases identified worldwide. That does lead to a death toll of roughly 3.4%, but only if the number of coronavirus patients is actually 95,000. The larger that number gets, the lower the virus’ mortality rate. For example, the seasonal flu kills up to 61,000 Americans every year, but with 45 million identified cases, the flu’s death toll is roughly 0.13%. That 45 million is the flu’s denominator.

And the good news is that the coronavirus’ denominator is almost certainly higher (probably much higher) than we realize.

“I wouldn’t rely too much on identified cases,” said Lawrence Gostin, Faculty Director of Georgetown University’s O’Neill Institute for National and Global Health Law. “Because the actual case counts are likely to be much higher, especially outside China.”

One of the problems, Gostin said, is the degree to which countries like the U.S. have been relying on “passive reporting.” That is, they’re largely waiting for patients to feel sick and seek out medical attention and testing rather than actively looking for cases. That’s not going to work very well for any number of reasons, not least of which is that many patients will have the virus and simply not know it.

Like the seasonal flu, the coronavirus is a respiratory illness. It settles in the lungs and leads to coughing, sneezing, occasional gastrointestinal problems and, in severe cases, pneumonia.

Respiratory illnesses tend to make the patient contagious before symptoms appear. This incubation period can last anywhere from two days to several weeks, leaving people walking around sick who don’t realize there’s anything wrong beyond a bit of fatigue.

More importantly, respiratory illnesses are incredibly common. The overwhelming majority of patients who contract COVID-19 may not have any idea they’ve got it. They’re likely to think they simply have the flu or “a bug,” or won’t give the issue any thought beyond “I just feel lousy.” Even patients who do think they might have this disease rarely develop symptoms serious enough to seek out medical attention.

All of which means, in the words of Dr. Davidson Hamer, a professor of global health at Boston University, that “case fatality rate is unclear.”

“Include mildly symptomatic patients,” he said. “Say you even throw out all the asymptomatic patients that are infected but don’t have disease. [The people we see] are just the upper part of the pyramid, but there’s a large base below that may not be included in the denominator, but that if were included would bring the case mortality rate to below 1%.”

We Don’t Understand the Number Either

Reporting on the coronavirus has involved a significant amount of accurate, but misleading, information. Perhaps the worst have been the WHO’s announcement that COVID-19 will become a pandemic, and the frequent comparisons we in the media make between the coronavirus and the deadly Spanish Flu.

The WHO defines a pandemic as a new disease that has spread around the world. In doing so, the coronavirus will find itself in good company. The flu causes pandemics. H1N1 was a pandemic; some doctors argue that malaria is too. Severity, lethality and virulence aren’t part of this definition. Only geographic reach.

But without context the word “pandemic” conjures up the last stages of disaster movies and novels such as "The Stand." It calls to mind industrial hospitals, like those currently pressed into action in Wuhan. It’s hard not to fear warnings that the world will erupt in a pandemic. The same goes for comparisons to the Spanish Flu.

In years past, before we began sorting resumes by Twitter followers and competing with bloggers on their own terms, many journalism publications had a rule against publishing photos of dead bodies. Except in certain circumstances, it was generally considered too shocking or distasteful. It was disrespectful to the victims and their families.

Coverage of coronavirus has demonstrated why we once held ourselves to this standard.

Reporters have repeatedly compared the coronavirus to the Spanish Flu because the two share an apparent death rate of 2% – 3%. This has been, putting it mildly, irresponsible. Comparing coronavirus to the Spanish Flu suggests that Americans should brace for the kind of death, disruption and heartbreak the 1918 virus caused.

In doing so it ignores one important fact: This is not 1918. Today’s patients have access to public health resources, clinical care and over-the-counter medicines that early 20th century patients could not have dreamed of. This isn’t even two weeks ago, with doctors increasingly understanding what to look for and how to treat it.

“There have been some fairly high quality publications that have come out of China in recent months that have given us a lot of insights into the disease,” said Hamer. “It’s quite clear that older individuals and those with underlying diseases are at much higher risk of having severe disease and potentially dying, whereas young adults and children are at much lower risk.”

The spread and lethality of a virus depends on specific conditions. The outcomes in Wuhan can help inform public health officials, but Chinese cities have their own population health, social structure and health care system distinct from those in the United States or Europe. The results from those first 80,000 cases may reflect what the world should expect as COVID-19 continues to spread, or they may not.

We simply don’t yet know.

Don’t Panic

“The classic public health approach is to test suspected infected persons, medically isolate infected persons, and quarantine those exposed,” said Gostin. “Once we get too many cases, and we are nearly there, we would shift to social distancing like school closures and cancelation of major public gatherings like sports or entertainment events.”

“Public health,” he added, “is concerned with prevention.”

Will Coronavirus Cause a Recession?

Markets, traders and economists have begun showing signs of panic over COVID-19. Readers should expect that to continue, if not accelerate, as public health officials lean into their jobs and begin closing schools and large events to slow the transmission of this virus. Already firms have begun airing fears of a recession, or trying to combat them. 

The result has been a financial roller coaster, with the Dow Jones Industrial Average losing over 1,000 points in a single day, gaining almost all of them back 24 hours later, only to drop again the next morning. This is what trading in a panic looks like.

For you, for both your money and for your health, the best advice is the same: Don’t panic.

The coronavirus will kill some people. It will hurt many more. This is not the seasonal flu, and it probably won’t be halted like the 2009 H1N1 outbreak either. It has spread around the world and some doctors suggest that up to 70% of the global population might contact or contract the disease at some point. More than 3,700 people have died at time of writing and we should expect that number to climb, particularly among the elderly, the sick, and people with compromised immune systems.

The coronavirus will also cause financial suffering. Wages have already begun to fall in China. American companies have reported supply chain disruptions from afflicted regions. Fear alone has wiped out nearly six months’ worth of value from the stock market and companies have already begun to anticipate hiring disruptions, both from the coronavirus itself and the public health response. 

These concerns are real. But don’t panic.

Invest your money wisely and well, the same way you would always do. Smart investing is smart investing, no matter how the market bounces around over the next few months. Tend to your career with an eye on your personal, professional and financial goals, the same way you would always do. March simply may not be the right month to quit your job to write that novel.

And tend to your health carefully, perhaps with a bit more caution than you would always do. Stay home if you’re feeling sick, and call your doctor if you have any reason to worry. Wash your hands regularly and try to use hand sanitizer before touching your nose and mouth.

There’s no need to stock up on rice and peanut butter, and leave checking up on life insurance policies for the skittish economics writers in your life. Just be a little more careful than normal, and try to take some pity on the parents that you know.

Their kids may get a few days off from school soon.