Does The 1918-20 Flu Pandemic Offer Lessons For Coronavirus Fallout In 2020?

Studying history to manage expectations about the future comes with a truckload of caveats, but for rare events, such as the current coronavirus crisis, the past is one of few tools for developing perspective. The obvious precedent for the world’s current woes is the Great Influenza Pandemic of 1918-1920, which killed an estimated 39 million people around the world—roughly 2% of the population at the time. A National Bureau of Economic Research (NBER) paper, released earlier this month, digs deeper into that pandemic for insight into COVID-19 fallout that continues to wreak havoc on a global scale in 2020.

Studying the century-old crisis shows that economic activity around the world suffered a sharp decline as virus blowback accumulated. Analyzing data for 43 countries, the NBER paper reports that “regressions with annual information on flu deaths 1918-1920 and war deaths during World War I imply flu-generated economic declines for GDP and consumption in the typical country of 6 and 8 percent, respectively.”

The impact on financial markets wasn’t trivial, either. “There is also some evidence that higher flu death rates decreased realized real returns on stocks and, especially, on short-term government bills,” write Robert Barro, an economics professor at Harvard, and his two co-authors in “The Coronavirus and the Great Influenza Pandemic: Lessons from the ‘Spanish Flu’ for the Coronavirus’s Potential Effects on Mortality and Economic Activity.”

The paper also points to what’s possible for the course of the current pandemic. The influenza of 1918-1919 came in three primary waves, Barro and his co-writers report. It started in the spring of 1918, followed by the most lethal period later in the year: September 1918 to January 1919. A third wave struck in February 1919 to June 1920. The three periods of assault remind us that remaining vigilant this time is a high priority for the foreseeable future.

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