Patients being treated for Spanish flu in a makeshift hospital near Camp Funston in Kansas.National Museum of Health and Medicine

There is considerable fear that the coronavirus pandemic will have a large and long-lasting effect on the American economy. But will it? Here’s a summary from a 2007 Fed paper about the impact of the much more serious Spanish flu pandemic:

The influenza of 1918 was short-lived and “had a permanent influence not on the collectivities but on the atoms of human society — individuals.” Society as a whole recovered from the 1918 influenza quickly, but individuals who were affected by the influenza had their lives changed forever. 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. Perhaps lessons learned from the past can help mitigate the severity of any future pandemic.

The Spanish flu killed about 700,000 people in the United States—the equivalent of 2 million today, far more than the coronavirus pandemic is likely to kill. What’s more, the Spanish flu was unusual in who it killed: upwards of 70-80 percent were prime-age workers. The coronavirus, by contrast, leaves prime-age workers nearly untouched, with 70-80 percent of deaths coming from those 60 or over. From a purely economic perspective, these two things make the Spanish flu far more severe than the coronavirus is likely to be.

Of course, there are also reasons to think that the Spanish flu had less economic impact than a big pandemic would have now. For one thing, we were on a war footing and that meant there was plenty of work for everyone even though certain industries suffered big losses. In fact, the combination of a war footing with the outsize death of prime-age workers meant that wages went up for everyone who survived.

It’s also arguable that the American economy was less centralized in 1918, which reduced the long-term damage. I’m not sure that’s actually true, though, nor am I sure it would have a big effect on recovering from a pandemic anyway.

On the flip side of the coin, health care is far better now than it was in 1918, and the government’s ability to stimulate the economy is considerably greater. Our transportation network also makes it easier to replace lost production in hard-hit areas with increased production in lightly hit areas.

Bottom line: from a cold-eyed economic perspective, the coronavirus pandemic is unlikely to be as severe as the Spanish flu, and the Spanish flu had a surprisingly modest effect on the economy in 1919 and beyond. Note that this isn’t an argument against aggressive fiscal stimulus if we need it. After all, that’s one of the reasons the coronavirus is likely to be less economically harmful in the first place. However, it does point in the direction of the coronavirus pandemic not having a large or long-lasting economic impact.

On Friday I posted a series of charts comparing the coronavirus breakout in six Western countries. Italy was the baseline, using the day they passed 100 confirmed cases as Day 0. All the other countries also used the day they passed 100 confirmed cases as Day 0. What it showed was that everyone was following the same trendline as Italy. They were just a few days behind. The only exception was the United States, which showed a substantial tick upward above Italy on the final day.

But the more I thought about this, the more I wondered if it was correct. The US could tick up only if there were lots of test kits available to confirm coronavirus cases, and we haven’t had a lot of test kits available. So I decided to replicate the charts myself. Here they are:

My charts go through March 13, rather than March 10, and the main takeaway doesn’t change much: every country is on Italy’s path. The United States does show an upward tick between March 9 and March 10, but it’s not enormous and it only puts us back on the main trendline anyway, not above it. The other countries also show a tick upward, including Italy, but it happens on March 13.

My tentative conclusion is that it was wrong to suggest that the United States had a big tick upward on March 10, and wrong to suggest that none of the other countries ever had a tick upward. As near as I can tell, every country is following nearly the exact same trendline regardless of how well or badly they responded to the outbreak.

METHODOLOGY: My charts are slightly different than the ones I showed you this morning. The spreadsheet with the daily data from Johns Hopkins is here. I summed up the numbers for each of the six countries normally, but I ditched the log scale on the y-axis. Instead, I normalized Day 0 for every country to 1 and then showed the growth rate instead of the raw numbers. I think this makes things a little easier to understand, and the raw numbers are easily available if you click the link and copy the spreadsheet yourself.

It is, as always, possible that I’ve made a mistake. If you think you’ve found one, please let me know.

UPDATE: Apparently the Johns Hopkins dataset contained an error that was corrected midweek. By chance, I was using the corrected numbers, which is why I didn’t replicate the spike. The other set of charts is also using the corrected data now, and everyone’s charts are happily in agreement.

Unlike many lefties, I am not a New York Times hater. They do some of the best reporting in the country and that’s why I end up linking to them a lot. That said, they sure do screw up their front page way more often than they should. Here it is on Friday evening:

If you look just at the top of the page, you’ll learn that President Trump has declared a national emergency; that he’s agreed to an aid package; that stocks have surged; that New York City has 400 coronavirus cases; that the worst-case estimates for coronavirus mortality are pretty bad; and that travelers entering the country aren’t being screened.

Then we get a coronavirus Q&A: how to clean your phone; what to do with your 401(k); and how to stock your pantry.

Only if you keep going do you finally learn that Trump misled the public over and over during his press conference today. Under a bland headline, reporter Linda Qiu tells us that on live national TV:

• Trump lied when he blamed Obama for testing shortages.
• Trump lied or was delusional—or something—when he said Google was ready to go with a coronavirus website.
• Trump lied when he said he closed the border with Europe “some time ago.”
• Trump pretended that he had no responsibility for disbanding a pandemic team in the White House.

She could have added that the entire press conference was a master class in how not to respond to the coronavirus: Trump crowded a bunch of people together; he shook as many hands as he could; he said he hadn’t bothered isolating himself or getting tested even though he’s been around other people who have tested positive; and he didn’t use the opportunity to explain best practices to people.

I get that condemning Trump is not the main goal of the news pages of the Times. They aren’t Mojo or The Nation or Rachel Maddow. But purely as a news service, isn’t it important for their readers to know that they can’t trust anything Trump says about the coronavirus pandemic? He’s had several chances to get it right and his self-centered personality simply doesn’t allow him to. This is something that the mainstream news media needs to make sure the public understands.

Democrats have reached agreement with Treasury Secretary Steve Mnuchin on an emergency coronavirus bill, but it’s not entirely clear exactly what’s in it. The Washington Post seems to have the most complete story at the moment:

The White House and House Democrats reached agreement Friday on a coronavirus relief package to spend tens of billions of dollars on sick leave, unemployment insurance, food stamps and other measures to address the unfolding crisis.

….The initial proposals underwent significant changes over the hours of talks, and toward the end negotiators were haggling over a less ambitious proposal for family and medical leave from Rep. Robert C. “Bobby” Scott (D-Va.) that would expand the number of workers who can take up to 12 weeks of job-protected leave under the Family and Medical Leave Act while drawing down wage replacement. Employees would get two-thirds of their salary replaced up to $4,000 a month, and [employers] would be reimbursed by the federal government. Separately, employees would also be able to take 14 days of paid sick leave, with the government reimbursing employers for part of the cost.

Another controversial provision in the original bill would have increased the percentage of Medicaid spending borne by the federal government by eight percentage points through Sept. 30, 2021. That would be a welcome relief to states, which could see an influx of Medicaid enrollees in a time of economic crisis. But the price tag for the federal government could have been vast — stretching easily into the tens of billions of dollars.

I assume that Medicaid spending was increased in the final bill, but that’s not clear. Stay tuned for more details later.

UPDATE: The LA Times adds this:

House Speaker Nancy Pelosi and Treasury Secretary Steven T. Mnuchin reached a deal Friday on an economic stimulus package to address the coronavirus, providing paid sick leave for workers and pumping billions of dollars to states for food programs and unemployment benefits….It would also dramatically expand access to free coronavirus testing. Insurance companies would be required to cover it without a copay for consumers and a federal national disaster program would reimburse the cost for people without insurance.

Trump’s proposal for a payroll tax holiday was not included in the bill. The Democratic proposal for a permanent paid sick leave requirement was also not included.

Gripas Yuri/Abaca via ZUMA

Like many of you, I cringed my way through President Trump’s coronavirus press conference a couple of hours ago. There are so many takeaways that they’re hard to list. Trump claimed that a Google triage website was either ready now or just about ready—it was a little hard to tell—but then Google followed up afterward with a tweet saying that development was in “early stages.”¹ Trump spent upwards of half his time congratulating himself for the great job he’s done and then blaming all our problems on bureaucratic tangles he inherited from Obama. He invited business people to the podium and then shook all their hands—precisely what doctors have told us not to do. He said drive-up testing stations were available, or would be soon, or something, without any indication of when and where they would be. The coronavirus, he said, would soon “wash through” and everyone would come out the better for it. And he hardly even mentioned any of the following:

• Don’t shake hands.
• Practice social distancing.
• Avoid large crowds.
• Cancel book clubs and other unimportant meetings.
• Wash your hands.
• Don’t touch your face.
• Etc.

Trump had a nationally televised stage to urge good habits on people, but he didn’t. It’s always all about him. Everything is always about him. It’s unbelievable.

¹Actually, it’s worse than that: it will initially direct people only to pilot sites for testing in the Bay Area. “In all,” says The Verge, “the difference between the reality of what is being built and what was promised during the press conference is very large.”

It’s raining! Not in this picture, mind you, which was taken last year, but it was raining on Thursday and this is just what poor Hilbert looked like. He was quarantined to the porch, looking wistfully into the garden where he wanted to prowl around. But every time he stepped out, he got hit by giant globs of water falling from the sky and hurried back to shelter. It was a sad day indeed.

If the coronavirus shock puts the economy into a recession, how should we respond? Here’s the chart that makes me ask the question:

In all recent recessions, the personal saving rate has plummeted beforehand, which makes it hard for consumers to respond to the shock of losing income. Their only option is to reduce their consumption. But that’s not true right now. After the Great Recession, the saving rate spiked upward and has continued to grow at a modest rate ever since.

So here’s my question, aimed at serious economists because it’s above my pay grade: would a normal stimulus work in a case like this? If a recession hits and savings are low, people are forced to cut back on spending and this is what propels the recession. Putting big chunks of money in their pockets without bothering too much about targeting it is obviously a good thing. But if savings are high, what’s the point? People have money to spend, so that’s not the problem. They’re just afraid to spend it (or can’t spend it because businesses are shut down).

There are, of course, plenty of individuals who are going to lose their jobs and can’t make up for that out of savings. On a purely humanitarian basis, we should do everything we can to help them. I have no argument with that. My question is solely macroeconomic: would a large, general purpose stimulus be much help in a situation like the one we face now, where savings are high and the spending shock is obviously extremely temporary?

UPDATE: I don’t think these charts are correct. I’ve replicated them here through March 13 and they don’t seem to show any unusual behavior for the United States.

Based on data from the Johns Hopkins Coronavirus Data Repository, here is how the outbreak has progressed in six Western countries:

The charts are all done using a log scale on the y-axis, which means that exponential growth shows up as a straight line. So far, every country has shown the same growth rate except for one: the United States. We are 11 days behind Italy, but our caseload has suddenly started ticking up past normal. Note that the Trump Tick might look small, but this is because it, too, is on a log scale. That small tick indicates that we have about 2x or 3x more cases than you’d expect at this stage.

Why? Probably because the federal government refuses to act with the seriousness it should. Because that might be bad for Donald Trump’s reelection chances.

Should states be allowed to use Medicaid to respond more flexibly to the coronavirus pandemic? Of course they should. But they can’t:

Despite mounting pleas from California and other states, the Trump administration isn’t allowing states to use Medicaid more freely to respond to the coronavirus crisis by expanding medical services. In previous emergencies, including the 9/11 terrorist attacks, Hurricane Katrina and the H1N1 flu outbreak, both Republican and Democratic administrations loosened Medicaid rules to empower states to meet surging needs.

….One reason federal health officials have not acted appears to be President Trump’s reluctance to declare a national emergency. That’s a key step that would clear the way for states to get Medicaid waivers to more nimbly tackle coronavirus, but it would conflict with Trump’s repeated efforts to downplay the seriousness of the epidemic.

Trump has been dithering over this for at least the past few days. This is from Wednesday:

The administration is “not comfortable with the optics of national emergency” because of how it might impact Wall Street, tourism and air travel, a former Department of Homeland Security official said. “That’s a big deal to Wall Street, a big deal worldwide,” the former official said. “It would instill fear in the general public.”

At this point, I doubt that an emergency declaration would spook either Wall Street or the rest of the world. We already know coronavirus is a big deal. Donald Trump is the only one who’s trying to pretend otherwise.

Shealah Craighead/White House/ZUMA

Politico reporter Dan Diamond on President Trump’s listless attitude toward coronavirus testing:

My understanding is he did not push to do aggressive additional testing in recent weeks, and that’s partly because more testing might have led to more cases being discovered of coronavirus outbreak, and the president had made clear — the lower the numbers on coronavirus, the better for the president, the better for his potential reelection this fall.

Republicans have made a habit of denying reality over the past couple of decades. Climate change doesn’t exist. Tax cuts pay for themselves. The Great Recession was all because of reckless government loans to black people. Hillary Clinton was responsible for Benghazi.

Trump, of course has taken this to new heights. His inauguration had the biggest crowds in history. Five million people voted illegally in 2016. Russia had nothing to do with election meddling. Wind turbines cause cancer. China pays for his tariffs. Etc.

You can get away with this for a while, especially if you have Fox News and talk radio to back you up. And the longer you get away with it, the more convinced you become that it will always work, that everything in politics is marketing. So eventually you go too far: you try to deny the reality of an epidemic that even your most fervent supporters know is real. You double down by quoting obviously bogus testing numbers. But unlike your previous delusions, this one has real consequences: since testing and tracing are the backbone of infectious disease control, a lack of testing makes the epidemic even worse.

The United States was never likely to control the coronavirus as well as places like China and Singapore, which tolerate centralized control in a way we just don’t. At the same time, we’re also richer than these countries and could afford to spend far more money on things like free testing, income assistance so sick people would stay home, and subsidized medical care so people would seek help in the first place. But that would have made the coronavirus pandemic more visible, not less, and that’s something neither Trump nor his conservative allies were willing to abide. They’re so used to denying reality and getting away with it that they just couldn’t believe they were finally faced with a situation where it might not work.