H1N1 and you: the economics of pandemics in brief
As we enter this cold and flu season, there is a new virus on the loose: H1N1. Well, it is not that new. It has mutated in a way that has become a little more difficult to control in its spread. While Congress debates health care reform becoming universal as a panacea for escalating health care costs, there is no panacea for this virus. In a time of recession, it is easy to imagine that the effects of such a contagion can be multifaceted. First, consumer confidence can be hurt by fear of becoming infirmed to the point of having to dip into savings (whatever may be left) for extended health care. Second, the fear that workers will miss work and thus reduce productivity has some firms nervous about hiring in an environment that is already shaky in its recovery. Third, retail and restaurant business are gathering places where a lot of people can be in the same place simultaneously, and a lot of touching and ingesting of air, food and drink happen. If fear becomes reality, we may have something akin to what Mexico experienced last year on our hands, which could easily slow our economy’s slow recovery. President Obama has now declared this a national emergency; this may mean higher fiscal deficits than the large number already in place.
However, there are economic silver linings. Pharmaceutical companies that manufacture everything from vaccines to symptom-relief drugs are likely to see a surge in revenue. Those that make hand sanitizers, bleach and other products that are meant to reduce the spread of viruses will see an increase in sales. This means an increase in profits to retailers with pharmacies and drug aisles. How these gains will offset the potential losses is unknown, but if the American experience tells us anything, it says opportunity lies in chaos waiting to be seized. This is one of those times. Stay healthy.
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