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Pandemic Flu: Potential for U.S. Economic Recession

We have heard the estimates that the attacks of September 11, 2001 cost the terrorists about $500,000 to execute. Yet the effects, both immediate and afterward, were devastating. The value of the human lives lost on September 11th is truly incalculable.

As heartless as it may seem, the authors of a study from the Federal Reserve Bank of New York, Measuring the Effects of the September 11 Attack on New York City, estimated that the lost lifetime wages of the nearly 3,000 victims would have aggregately reached $7.8 billion. Simply looking at the dollar cost of the attacks of September 11th, it has been estimated that more than $30 billion was spent in earnings losses, property damage, and cleanup costs. According to another report by the NY Fed, spending for homeland security rose from $56.0 billion in 2001 to $99.5 billion in 2005.

This is all dwarfed by the estimated impact on the U.S. economy of the second worst recession that would occur in the event of a severe pandemic flu outbreak. According to a recently released report, Pandemic Flu and Potential for U.S. Economic Recession released in Trust for America's Health (TFAH)'s March 2007 report, U.S. GDP could drop over 5.5 percent, leading to an estimated $683 billion loss. While there continue to be questions about the spread of Avian Flu, it was also recently discovered that two “small mutations” could result in H5N1 jumping to humans.

The TFAH report opens stating flatly that "Flu pandemics occur 3 to 4 times each century, when a new influenza virus emerges against which people have little-to-no immunity. The major questions are when the next pandemic will occur, what strain of the virus will be involved, and how severe the outbreak will be." It makes clear that a new flu pandemic outbreak is inevitable, historically speaking.

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A few additional points, then, should be noted:

H5N1 “bird flu” is being monitored as a major threat for potentially becoming the strain that leads to the next human pandemic...containment, not vaccine is the current strategy...major gaps remain.

On a state by state basis, the implications are quite interesting:

Nevada could face the highest percent loss to its economy, taking an 8.08 percent hit (nearly $9 billion), while Maryland could face the lowest proportional amount lost at 5.09 percent ($12.5 billion).

The concern as we write today, is not the magnitude of the economic impact of an H5N1 outbreak, but that there seems to be a denial of sort about the prospects of the virus making the jump to humans, and that there is still no vaccine available despite the nearly $7 billion already spent on pandemic preparedness.

Striking also is the comparison of the costs of executing the attacks of September 11th, and the resultant costs of the continuing responses (now hundreds of billions of dollars).

While the medical response to pandemic flu will be important to controlling its spread and limiting its toll, there are considerable non-medical issues related to flu preparedness that are essential for ensuring the continued well-being of the nation's economy. Planning for Continuity of Operations (COOP) and Continuity of Government (COG) is critical to maintaining the overall viability of society. Thus, while we rightly prepare for the flu, we must be equally prepared to function during the flu.

The Center for Technology and National Security Policy of the DOD's National Defense University has prepared a number of freely-available items which can help civilians be prepared both before and during the flu. "Bird Flu and You" is a poster available in 9 languages with basic information about influenza preparedness. "Weathering the Storm" is a report with information about planning for COOP, including instructions for carrying out "tabletop excercises" with a COOP plan.

Electronic copies of the poster are available at http://www.ndu.edu/ctnsp/Bird_flu.htm. Electronic copies of the report are
available at http://www.ndu.edu/ctnsp/Def_Tech/DTP%2038%20Weathering%20The%20Storm.pdf, and to request hard copies of the report, contact the Life Sciences group at lifesciences@ndu.edu.

Robert E. Armstrong, Ph.D.
&
Mark D. Drapeau, Ph.D.

Center for Technology and National Security Policy
National Defense University
Washington, DC