An Indiana economics professor predicted on Sunday that the coronavirus pandemic could cost the U.S. $7 trillion, and by June the domestic unemployment rate will be larger than at any point since the Great Depression.
With confirmed cases of COVID-19 rapidly escalating across America, federal and local governments have moved to suspend domestic large sector activities to contain the outbreak. And as bars, malls and dine-in establishments continue to close around the country, millions of Americans have either already been laid off from their jobs or will likely be soon.
“Without vigorous steps, the CDC estimates the COVID-19 will infect 70 to 150 million Americans in the next few months, of whom 80 percent will get sick,” Michael Hicks, director of the Center for Business and Economic Research and professor of economics in the Miller College of Business at Ball State University, told Newsweek. “Of those who fall ill, 5 percent will need hospitalization and 1.2 percent will die. This would have enormous economic costs.”
“Economists place a dollar value on human life in order to help balance the benefit of life saving regulations and their inevitable costs,” he explained, “Using these estimates, the deaths projected from the COVID-19 disease could easily cost the U.S. over $5 trillion.”
Medical expenses to treat infected people could cost an additional $2 trillion, Hicks added, noting that these estimates are optimistic.
Hicks initially made the economic predictions in a commentary piece published Sunday on the Business and Economic Research’s (CBER) Data Center, a website hosted by Ball State University.
“We are in recession, which will be [a] very deep one,” Hicks wrote. “As of March 1, the U.S. had 2.66 million waiters and waitresses. Nearly all of them are now unemployed. The U.S. unemployment rate will double in two weeks, and rise to double digits by May.”
Hicks estimated that by June, the unemployment rate across the country will “be higher than at any point since the Great Depression.” He went on to argue that many American economists have called for “rapid, and expensive, intervention” and predicted that without such aggressive actions, the cost of the disease will likely total roughly $7 trillion.
“I have noted before that the mathematics of epidemiology are similar to mathematics of economics … We economists can see their work and put dollar figures to the epidemiological estimates,” wrote Hicks. “By my reckoning, without these aggressive actions, the costs of the most optimistic estimates of this disease in the USA exceed $5 trillion. Medical care costs will add perhaps another $2 trillion.”
Economists have called for aggressive action by the federal government to mitigate the economic costs of the virus, which would involve the most wide-ranging borrowing scheme since World War II, according to the New York Times.
As of Sunday morning, domestic cases of the COVID-19 virus exceeded 26,000, with at least 340 recorded deaths and 176 recoveries. With these figures, the U.S. has become the country with the fourth-most number of positive coronavirus cases following China, Spain and Italy.
The number of cases worldwide has surpassed 311,000, with more than 13,000 deaths and 93,000 recoveries.