What Economic Analyses of Past Pandemics Can Tell Us About the COVID-19 Aftermath

A big contraction was followed by a bustling aftermath—but with notable negative long-term effects as well.


In addition to the direct damage it does to human health, COVID-19 is sure to have an enormous economic impact. As we try to prepare for that, let's look at what economists have learned from the damage done by past pandemics, particularly the Spanish flu outbreak of 1918–19.

Begin with Elizabeth Brainerd and Mark V. Siegler's June 2002 paper for the Centre for Economic Policy Research, "The Economic Effects of the 1918 Influenza Epidemic." This comes the closest of all the papers I've read to looking on the bright side: They found "a large and robust positive effect of the influenza epidemic on per capita income growth across states during the 1920s."

No, that doesn't mean the flu was actually good for the economy. That growth, or at least some of it, "likely represents a return to trend rather than a change in trend." Since "flu deaths in 1918 and 1919 among prime-age adults are a significant predictor of business failures in 1919 and 1920," the economy was bound to see "a return to trend after this large temporary shock."

The authors acknowledge limits on their data—for example, they had per capita income only for the 1919–1921 range and then again in 1930, preventing them from being fine-grained about changes along the way through the 1920s. They also made no attempt to disentangle the direct effects of the pandemic from the effects of public health interventions that shuttered businesses. (They do note, sadly, that "even the strictest quarantines proved ineffective in preventing the epidemic in most regions.")

Nor are they able to compare and contrast the effects of different cities' policy responses. Philadelphia went ahead and held a huge parade for returning soldiers (bad idea). St. Louis opted for "closing the schools, shuttering movie theaters and pool halls, and banning all public gatherings." San Francisco ordered people to wear masks in public. Brainerd and Siegler can't offer much granular detail on how such different approaches played out economically. (Another issue they didn't directly discuss, one perhaps less relevant during Spanish flu times then today, has been addressed by other researchers: the effect on parents in the workforce when schools are shut for public health reasons.)

We do get some geographic variation in a 2013 Journal of Health Economics study focusing on Sweden—"The Impact of the 1918 Spanish Flu Epidemic on Economic Performance in Sweden: An Investigation into the Consequences of an Extraordinary Mortality Shock," by Martin Karlsson, Therese Nilsson, and Stefan Pichler. Since the epidemic had widely different effects in different areas of Sweden, the authors are able to compare and contrast its impact within a mostly homogenous population. And since Sweden did not participate in World War I, it's easier not to confound war effects with pandemic effects. (The pandemic did coincide with upheavals in nearby Germany and Russia, and the authors acknowledge that these might have disrupted the Swedish economy as well.)

Their results, they find, were "difficult to reconcile with standard theoretical models." Ordinarily, one would expect an "immediate increase in GDP per capita," due to the more productive capital brought to bear per worker. That didn't happen. They also note "an apparent redistribution between capital and labour"—in capital's favor—"which suggests that the impact of the pandemic goes beyond what standard growth theory would predict."

In any case, the author found that the flu "led to a significant increase in poverty rates." Capital returns fell, unemployment shot up, and Sweden's GDP decreased by "five per cent in a single year." But "the recovery was very quick," they note. "Swedish GDP increased by 8 per cent in 1922 and the country faced steady economic growth for the rest of the decade….Moreover, the 1920s were characterised by fast growth in real wages: in 1930, they were at roughly twice their 1918 level, and not even the sharp downturn of 1921 made them stop growing."

But there were darker long-term effects as well. The "pandemic appears to have had a strong and lasting positive effect on poverty," they write: The "difference in flu mortality would give rise to an increase in poverty by 9.7 per cent." And the generation of children born during the pandemic were more likely to have health problems and lower wages.

A 2007 paper by Thomas A. Garrett of the St. Louis Federal Reserve Bank, "Economic Effects of the 1918 Influenza Pandemic," speculates about the possibilities of a future pandemic: "Researchers at the U.S. Centers for Disease Control and Prevention calculate that deaths in the United States could reach 207,000 and the initial cost to the economy could approach $166 billion, or roughly 1.5 percent of the GDP." The long-run costs would be even higher: "up to 1.9 million dead in the United States and initial economic costs near $200 billion."

Garrett brings up something the Brainerd/Siegler paper sloughed over: Other bad things were also happening to the economy at the end of the 1910s, most especially World War I, which may complicate any direct comparison of then to now.

Given the "almost complete absence of economic data from the era, such as data on income, employment, sales and wages…especially at local levels," Garrett looks for evidence in "newspaper articles printed during the pandemic, with most of the articles appearing in newspapers from…Little Rock, Ark., and Memphis, Tenn." Between that and the evidence in earlier economic studies, he finds a level of geographic variation in the disease's effects that is unlikely in our far more interconnected nation a century later.

Cities, unsurprisingly, had "higher mortality rates than rural areas of the states." Little Rock saw general merchant business declines of 40 percent, and even the retail grocery business reduced by one-third. A specific department store reported a more than 50 percent cut in daily income, but at least it was still operating. Though there was a flu-related "increase in demand for beds, mattresses and springs," the city's businesses were "losing $10,000 a day on average ($133,500 in 2006 dollars). This is actual loss, not a decrease in business that may be covered by an increase in sales when the quarantine order is over."

The Memphis Street Railway reported that 124 of its 400 employees were too sick to work on one day. A depopulated telephone company begged the public to make fewer unnecessary calls. Coal mine operators reported a 50 percent cut in production, with some mining camps forced to shut down from raging infections. Garrett explains the possibility of a post-pandemic increase in wage and income growth on "a greater increase in capital per worker, and thus output per worker"—which might not work out exactly the same way from a starting point of 2020 rather than 1920.

He also notes that the "fact that males aged 18 to 40 were the hardest hit by the influenza had serious economic consequences for the families that had lost their primary breadwinner." (Needless to say, "loss of prime working-age employees also had economic consequences for businesses.") And "cohorts in utero during the 1918 pandemic had reduced educational attainment, higher rates of physical disability and lower income."

Yet most of 1918 pandemic's effects "were short-term," Garrett concludes. "Many businesses, especially those in the service and entertainment industries, suffered double-digit losses in revenue. Other businesses that specialized in health care products experienced an increase in revenues. Some academic research suggests that the 1918 influenza pandemic caused a shortage of labor that resulted in higher wages (at least temporarily) for workers, though no reasonable argument can be made that this benefit outweighed the costs from the tremendous loss of life and overall economic activity."

Garrett's grim conclusion: "Given our highly mobile and connected society, any future influenza pandemic is likely to be more severe in its reach, and perhaps in its virulence, than the 1918 influenza despite improvements in health care over the past 90 years….Unfortunately, a 2005 report suggests that the United States is not prepared for an influenza pandemic. Although federal, state and local governments in the United States have started to focus on preparedness in recent years, it is fair to say that progress has been slow, especially at local levels of government."

NEXT: U.K.'s Response to Coronavirus: Loosen Some Regulations While Demanding More Authority

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. OT kinda but according to the latest numbers on Fox news the latest Covid-19 death rate stands at .014. In other words an ordinary flu. That could change of course but at this point the hysterical response is absurd. Millions out of work. Thousands of businesses closed by executive decree. This is pure insanity. Also Judge Napolitano wrote a piece about the constitutional issues involved. Worth a read.

    1. Current worldwide death rate .041. In other words bad flu season but hardly an apocalypse.

      1. Do you have a pay~pal ? because if you have you can make an extra 2000 weekly to your revenue only working at home 3 hours per day… go here… Read More

    2. Illinois Governor Pritzger issuing “stay at home” order for entire state. Current deaths in Illinois from COVD-19 .01%. In other words an ordinary flu season. Starting to wish I hadn’t sold my wood chipper.

      1. By cutting down driving, they will force a drop in the overall death rate. Flu bugs ain’t got nothin’ on idiots with an accelerator to step on and no grasp of physics.

    3. Current CA death rate .013. In other words an ordinary flu season. CA also on statewide stat at home.

      1. You act like it is over. We are experiencing exponential growth in both cases and deaths – the rate is steady. Your death rate numbers are pure bs.

      2. You’re confused, but that’s okay. It’s understandable.

        Yes, the likely death rate for COVID-19 is around 1% once we account for mild cases not taken into account (it could be a bit less than that even). So in your proportional numbers, it’s around 0.01.

        But the typical death rate for Influenza is 0.1% (it would be 0.001 using proportions). It is literally an order of magnitude difference.

        That is bad. It isn’t apocolyptic, but the Flu kills several 10s of thousands a year in the US and doesn’t spread as rapidly as COVID-19. So it is still bad. Your insistence that it isn’t worse than the flu is not borne out by the data.

  2. Some academic research suggests that the 1918 influenza pandemic caused a shortage of labor that resulted in higher wages (at least temporarily) for workers

    It’s a safe bet that won’t happen this time. The Black Death also caused a shortage of labor – that in fact lasted nearly 200 years. But because that society had become corrupt by then, the outcome was legal mandates about cash wages that prohibited increases – and the beginnings of enclosure (the confiscation/privatization of ‘commons’ land so that peasants who had previously been outside the cash economy were forced into it – thus ‘correcting’ the shortage of labor)

    Methinks the US now will adopt more lessons from corrupt models than from ‘free market’ models.

    1. “It’s a safe bet that won’t happen this time.”

      More simply, it won’t happen because the VAST majority of people who are dying from COVID-19 were not in the labor force anyway.

      1. Silver lining alert: Old folks (i.e., Trump voters) die off. Solvency of social security trust fund restored. So much winning, we’re gonna get tired of the winning.

  3. 2018-2018 Influenza infected 45 million Americans, killed 79,000, and 44.2 million recovered.

    Go to Google maps (traffic) and you can see people in Commifornia still driving around. Quite a few seem to be leaving state.

  4. “He also notes that the “fact that males aged 18 to 40 were the hardest hit by the influenza had serious economic consequences for the families that had lost their primary breadwinner.” (Needless to say, “loss of prime working-age employees also had economic consequences for businesses.”) And “cohorts in utero during the 1918 pandemic had reduced educational attainment, higher rates of physical disability and lower income.”
    Of course the big difference with the current flu is that it mostly kills old people with pre existing health issues. I’m pretty old myself so I’m not unsympathetic. But the economic impact of sick people dying in their 80s and 90s is not a negative.

    1. There is no way that young/middle aged Americans are going to stay cooped up for more than two weeks.

      Enough is enough. Boomers are part of the reason that young Americans have a $23 trillion national debt to deal with. Now Boomer politicians want to destroy the US economy. That wont last long.

    2. “And ‘cohorts in utero during the 1918 pandemic had reduced educational attainment, higher rates of physical disability and lower income.'”

      I wonder if there was something else that happened in the 1930’s that might explain ‘reduced educational attainment, higher rates of physical disability and lower income’ among people entering young adulthood at that time?

  5. Unfortunately, this pandemic is going to prove destructive to our economy because it’s an election year, and elected leaders feel obliged to pass panic legislation. I’m expecting we’ll see inflation jump back to the highest point we’ve seen since H. W. Bush.

    1. Reagan and Holy War Bush invented wholesale asset-forfeiture laws (with help from Biden). They also backed formation of the Financial Action Task Force to push that snake oil since 1989 and never mention its effect on fractional reserve banking systems. Something is coming home to roost.

  6. This article was fantastic. Thanks for the research, Brian.

  7. I’m investing in divorce law firms and bankruptcy specialists.

  8. Comparing this one to the 1918 flu seems a bit much at this stage. If the number of deaths doesn’t surpass all the flu’s from each of the past 10 years this is going to look bad for the politicians who have been spreading fear and panic.

    1. COVID-19 is 25x more deadly than swine flu
      Educate yourself
      Fully documented proof below.

      If the number of deaths doesn’t surpass all the flu’s from each of the past 10 years

      The math is simple. The ONLY valid comparison is
      1) The RATE of expansion
      2) For the same number of days
      3) Starting from scratch.

      COVID-19’s death rate passed the swine flu in …. 16 days … to be 25x greater.

      The link also shows why comparing with seasonal is so USELESS.
      Most Americans are IMMUNE from seasonal flu (vaccine)
      And swine flu is INCLUDED in the flu vaccine.
      NOBODY is immune to COVID-19, whose death rate is 25x worse,

      1. You keep posting this…

        Maybe you should learn how math works instead.

      2. Fuck off and die, Hihn.

  9. All diseases are not “created” equal. Viruses are very different than microbial critters. The forms of pneumonia are an obvious example. We have been trying to “cure colds” for 100 years, Find vaccine for AIDS, 40 years. We have had a new flu vaccine every year for 40 or so years and they now work 40% of the time.

    I predict that this new virus will go through the world and then settle down to a less dangerous cousin to the annual winter flu season.

    1. Very likely true. The concern is how many will die this year.

  10. Trump AGAIN exposed as lying … about the FDA this time… by the FDA Commissioner! It never ends.

    FDA Head Dials Back Trump’s Timetable (short video)
    “FDA Commissioner Stephen Hahn talks about the timelines for a pair of new treatments being considered to help combat the coronavirus pandemic. After Trump claimed the use of a drug to fight malaria — hydroxychloroquine — would be available “almost immediately” Hahn said a LARGE clinical trial was needed first,” with Trump at his shoulder!

    How many times have we seen Trump make a PHONY covid-19 claim … only to be immediately corrected, “to his face” (he’s at their shoulder)

    How many times have we seen the President make a PHONY COVID-19 claim … only to be immediately corrected, “to his face” (he’s at their shoulder) by experts?


    1. Part 2

      Today’s COVID press conference, yet another disaster. Trump was attacking and insulting reporters, as he always does when he’s been caught in falsehoods … (most notably, his DISGUSTING lie that the Charlottesville rioting and mass assaults was launched by the “alt-LEFT charging and swinging clubs” – thus trying to absolve his neo-nazi and white nationalist supporters, later PROVEN the attackers.)
      Just hours ago, the whole thing exploded. It was NOT safe in China. It can kill in doses as small as two grams. China cut back their own clinical trial, almost immediately.

    2. You do realize that the FDA is part of the executive branch, right? Don’t make me spell it out for you.

  11. Part 3

    (Bloomberg) — The drug touted by the U.S. President Donald Trump as a possible line of treatment against the coronavirus comes with severe warnings in China and can kill in dosages as little as two grams.
    China, where the deadly pathogen first emerged in December, recommended the decades-old malaria drug chloroquine to treat infected patients in guidelines issued in February after seeing encouraging results in clinical trials. But within days, it cautioned doctors and health officials about the drug’s lethal side effects and rolled back its usage.
    This came after local media reported that a Wuhan Institute of Virology study found that the drug can kill an adult just dosed at twice the daily amount recommended for treatment, which is one gram.

    1. Fuck off and die, Hihn.
      No one cares about your lies and bullshit.

      1. That’s Bloomberg News
        It SAYS it’s Bloomberg.
        The link goes to a Bloomberg News story
        The Bloomberg News story says everything I cited (and more)
        You forgot to scream FAKE NEWS.

        1. How likely is it that a drug that lethal would be used routinely for malaria prophylaxis?

          1. Different dosage.
            China did many things too fast, in panic,
            We did almost everything two months. too late, in Trumptardism

  12. Nice info, all about that you can see in Daftar Bandar Casino Online

    Thanks admin….

  13. Except in previous cases, we didn’t have ignoramus governors putting everyone out of work and ruining their businesses.

    1. In previous cases. There were many.

      “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men

  14. I make a big amount online work . How ??? Just u can done also with this site and u can do it Easily 2 step one is open link next is Click on Tech so u can done Easily now u can do it also here..>>> Click it here  

  15. Sᴛᴀʀᴛ ᴡᴏʀᴋɪɴɢ ғʀᴏᴍ ʜᴏᴍᴇ! Gʀᴇᴀᴛ ᴊᴏʙ ғᴏʀ sᴛᴜᴅᴇɴᴛs, sᴛᴀʏ-at-home moms or anyone needing an extra income… You only need a computer and a reliable internet connection… Mᴀᴋᴇ $90/h and up to $12000 a month by following link at the bottom and sɪɢɴɪɴɢ ᴜᴘ…
    More Read Here

  16. The only VALID comparison between COVID-19 and swine flu is to compare HOW FAST each one spread – how fast did the death toll mount? (How many died after the same number of days? Simple graphs at the source)


    “The challenge with COVID-19 is we are all eligible to get sick and spread the disease all at the same time.”

    ELIGIBLE, because none are immune, unlike seasonal flu

    Last week, Trump said this at a news conference in the Oval Office: “If you go back and look at the swine flu and what happened with the swine flu, you’ll see how many people died and how actually nothing was done for such a long period of time, as people were dying all over the place.

    Dying BECAUSE nothing was done! And this 25 times worse (keep reading)

    Data from the U.S. Centers for Disease Control and Prevention track the increase of H1N1 swine flu in 2009 from the day of the first death – April 28th, 2009 — compared with the rise of COVID-19 since the first U.S. coronavirus death was reported in Washington on Feb. 29.

    … the CDC had confirmed 4,226 COVID-19 cases in 16 days since the first death.

    At the same stage in 2009, the CDC had tallied 3,352 H1N1 cases.
    But, contrary to Trump’s claims, the death rate for COVID-19 has far outpaced H1N1 over the same span.

    The CDC had confirmed 75 COVID-19 deaths through Monday. By contrast, 16 days after the first swine flu death, there were only three H1N1 deaths reported to the CDC.

    COVID-19 is 25 times more deadly than swine flu

    The CDC estimates about 12,000 Americans ended up dying from swine flu between April 2009 and April 2010.

    12,000 x 25 = 300,000

    **”… (swine flu) didn’t go away. Many people don’t realize it’s now part of the seasonal flu and covered by the annual flu vaccine. … COVID-19 is completely new, is hitting on top of the seasonal flu, has no vaccine and clearly warrants the stronger response because nobody is immune. “The challenge with COVID-19 is we are all eligible to get sick and spread the disease all at the same time

    ****”Less than two years ago, the seasonal flu was especially deadly. It killed an estimated 61,000 Americans, but it didn’t overwhelm health care workers and hospitals, as COVID-19 did in Italy and threatens to in the U.S. Those people (with seasonal flu) were spread out from November to April or May. Our healthcare system is designed to handle that kind of load. Not so with COVID-19.”

    1. Fuck off and die, Hihn.

      1. Make me.

      2. You cannot shout down the truth. Or save Trump’s ass. Sorry.

        Don Lemon says Trump is gaslighting you … and rolls the tape.

        Lemon is usually too snarky for me, but this is DEVASTATING … MANY video clips … crushing Trump’s lies with Trump’s own words..

        **Trump now says he always knew it was a pandemic. Did YOU get suckered?
        ***In February Trump said it’s a Democrat hoax (AND a pandemic LOL) Did YOU swallow that?

        Trumpsters SCREAM in rage, FAKE NEWS. HE NEVER SAID THAT. See it at 2:23 in the video. Plus over a dozen clips of him saying the virus is no problem … AT THE SAME TIME HE KNEW IT IS A PANDEMIC?? Did YOU get suckered?.

        The damage from Trump’s delay, if you haven’t seen it explained:
        On average, each infected person infects two more. So the longer we don’t avoid crowds, stores, workplaces, the more the virus expands exponentially, where each one infection becomes 3 … each 3 becomes 9 … each 9 becomes 27, etc. And one can be a carrier, UNKNOWN (no symptoms) for up to 14 days.

        This from a different source. Dr. Sonjay Gupta says we’re escalating at the same rate as Italy, but 10 days behind.

        ***Yesterday, Italy had 793 deaths, in a country 1/5 our population. And we’ve been on the same curve. IF we stay on that curve, we’ll have 4,000 deaths in a single day, by month-end.

        Italy is way ahead of China on total deaths … caused by delays and indecision (a lot fewer than our foul ups)

        Per the Deep State and vast Media Conspiracy, of course. 🙂

  17. One aspect I have not seen discussed anywhere. We are about to see the greatest generational transfer of wealth in US history. The Wuhan virus has a significantly higher mortality rate on the elderly, the cohort with the greatest amount of wealth.

    I don’t know how that plays out over time, but I would submit it is worthy of considerable thought. There will be a ‘day after’ the Wuhan virus pandemic.

    1. The “Wuhan” virus is 25 times more deadly than the swine flu was. OVERALL (all age groups). Proof is documented just above you.

    2. Interesting perspective. I hope those old people have secured their wealth in trusts to avoid the government takings.

      1. Paranoid much?

  18. “Unfortunately, a 2005 report suggests that the United States is not prepared for an influenza pandemic. ”

    If Trump wasn’t elected president in 2016 this would have never happened in 2005.
    – The MSM

    1. Trump’s delays and lies have NOT already killed hundreds, with thousands yet to go

  19. Pretty sure the issue here is the economic effects of the manufactured panic rather than the disease.

  20. The Don’s gang had to show off its Chinese-led asset-forfeiture policymakers in Paris February 20. Thanks to that brilliant move they can kiss reelection bye-bye. The Dem slogan ought to be: Re-election? FATF chance!

  21. When the first 5 paragraphs state that the researchers didn’t have enough information to make a prediction… it becomes a wild guess.

    1. You lie about what Doherty Bailey wrote.
      Shame on you,

  22. Stay At Home  Mom From New York Shared Her Secret On How She Was Able To Rake In $1500 Weekly From Online Work Just 3 Weeks After Losing Her Old Job…….. Read more  

  23. I’ve learned a new technique due to the panic-demic. Basically, when you realize the stock market is going to seriously tank; start shorting the market. As long as you aren’t an elected official, it is an acceptable method to take advantage of the mentality. The crash was coming, a batty reason tipped it over.

  24. I am creating an honest wage from home 3000 Dollars/week , that is wonderful, below a year agone i used to be unemployed during a atrocious economy. I convey God on a daily basis i used to be endowed these directions and currently it’s my duty to pay it forward and share it with everybody, started…. Read More  

  25. Make $6,000-$8,000 A Month Online With No Prior Experience Or Skills Required. Be Your Own Boss And for more info visit any tab this site Thanks a lot just open this link….. Read More

  26. ★Makes $140 to $180 reliably online work and I got $16894 in one month electronic acting from home.I am a bit by bit understudy and work basically one to a few hours in my extra time.Everybody will finish that commitment and monline akes additional money by just open this link….. Read More

Please to post comments

Comments are closed.