The economic impact of a pandemic

Our current working assumption is still that the number of coronavirus cases in the US is restricted to the low tens of thousands which, in a country of more than 325 million, would represent an infection rate of less than 0.1%. Furthermore, we suspect that the number of cases will drop off again once summer arrives, meaning that the economic disruption would last for little more than one quarter. But, in a worse-case scenario that resembles past pandemics, up to one-third of the population could eventually become infected, with the disruption lasting for closer to 12 months. This Update presents some very rough estimates of the potential economic impact under those two scenarios. It should not be misinterpreted as a scientific exercise – it’s all finger in the air / back of the envelope assumptions, designed mainly to think through the possible supply- and demand-side effects on different sectors.