The first reports of COVID-19, the name now used to describe the disease caused by a novel coronavirus, first emerged around New Year’s day of 2020. Since then, the conversation has shifted from containment efforts in Wuhan, China to social distancing and mandatory 
closures across the U.S., including in New York, California, Illinois [pdf], Massachusetts, and many other hubs of American economic activity. As the realities of mass shutdowns of economic activity begin to be felt across the country, Americans are hearing two competing and shifting narratives. The first is the newly adopted mantra of public health professionals: “flatten the curve.” The second is a push by some commentators and politicians to return American workers to work as soon as possible. Up until a few days ago, President Trump was in this latter camp but recently changed his recommendation to extend social distancing to the end of April.
In the middle of these changing and complex narratives are the questions we should all be asking: what are the health ramifications of a recession? And how do these balance against the risks from COVID-19?
Coronavirus triggers recession
As healthcare workers are knee-deep in the health impacts of COVID-19, the shutdown is already affecting other workers all over the country. Goldman Sachs estimated that weekly national unemployment claims for the week ending March 21 would be roughly 2.25 million claims. In reality, the number hit 3.34 million claims, substantially worse than the Goldman estimate. For the week ending March 28, the number hit 6.6 million claims [pdf] To put this in perspective, the highest number of unemployment claims ever previously recorded was during a week in 1982 when weekly unemployment claims were just under 700,000. Estimates are that 5 million Americans will lose their jobs in April 2020 alone. Unemployment will likely hit between 10% -30% of Americans; it was 3.5% just before coronavirus. Roughly one-quarter of Americans might lose their jobs, and the stock market crash just took a major bite out of retirement savings for millions of Americans. A Reuters poll of analysts about the likelihood of recession had a median probability of 80%.
Fortunately, research conducted in the wake of the Great Recession roughly a decade ago gives us some data about what happens to health when the economy goes into recession. The bottom-line: aggregate health does not decline during recessions.
Not all bad
Perhaps surprisingly to some, there is clear evidence that the health of the American public improved during the Great Recession. Lower mortality rates are associated with economic recessions and higher mortality rates with economic expansions. Following the Great Recession, economists found that some causes of mortality shrank significantly during the Great Recession. Traffic accident fatalities went down, workplace accidents dropped, cardiovascular and respiratory deaths decreased, and deaths from infectious diseases fell.
Similar trends were also found during the Great Depression 100 years ago, indicating that the correlations from the Great Recession data are probably not flukes. More free time (from reduced work hours) likely created more opportunities for healthy activities like sleep, exercise, and healthy food preparation.
Not all rosy
Not everyone feels the aggregate health benefits from reduced economic activity. These benefits are offset by increased morbidity and mortality from specific causes and for particular groups. The rates of suicide, anxiety, and depression increased substantially during the Great Recession. Also, adverse health effects may arise many years after the end of a recession, and the Great Recession was only one decade ago. A longer time horizon might shed light on the more subtle health effects of recessions.
There are also groups of people whose health did suffer in the Great Recession. In an article from the National Academy of Sciences, researchers found that older homeowners and younger people in the workforce were more likely to experience harmful changes in their blood pressure and blood glucose during the Great Recession. They thought these populations were hurt the most since they were the ones hit hardest by the crashes in the housing and stock markets (for older Americans) and employment layoffs (for younger Americans in the workforce).
Researchers in the early 1990s discovered that the all-cause risk of death for males who had been laid off from their jobs doubled for one year after the layoffs and remained significantly higher 20 years later. A 2009 report found that the risk of stress-related health conditions like stroke, heart disease, and psychiatric problems increased by 83% among laid-off workers following their business closing.
Compounding this stress is the fact that most people get health insurance from their employer. When people are laid-off, their health insurance is typically also lost. Studies after the Great Recession found that job loss increases depression and anxiety. The studies on substance abuse are mixed but suggest that job loss creates an increase in binge drinking, drug use, and alcohol-related deaths among working-age people.
Therein lies the rub. While there is ample evidence that aggregate mortality does not suffer during recessions, there is also plenty of evidence that health status does worsen for some. Basically, “recession-type events are associated with poorer health for the individuals who experience them.” Workers who were laid off in the Great Recession had significantly higher all-cause mortality risks in both the short and long terms. They were also more likely to self-rate their health as fair or poor.
Finding the balance
The number of individuals whose health is harmed by recessions is likely to be exceeded by the larger group who reap benefits, even if those positive benefits are weaker for any given individual than the health costs of, say, a long-term spell of unemployment.
So, how do we balance the economic impact of mandatory business closings against the health impact of opening the economy more quickly?
The former Chairman of the Federal Reserve, Ben Bernanke, recently opined that we should focus on the mortality rate:
“I think the public health issue is the most important one. . . If we can get that straight, then we know how to get the economy working again.”
There is growing consensus among economists that economic recovery requires first getting the spread of coronavirus under control. This sentiment has been echoed by multiple former Secretaries of the Treasury, multiple former Chairmen of the Federal Reserve Board, a former Director of the non-partisan Congressional Budget Office, and multiple former Chairmen of the Council of Economic Advisers (among many other experts). There is also evidence from the Spanish Flu in 1918 that cities that implemented strict public health interventions had faster rates of economic recovery after the pandemic was over.
Some commentators, including the Lieutenant Governor of Texas, think that we should sacrifice life for the sake of shortening the coming recession. This seems wholly misplaced considering the expert consensus that the coming recession is unlikely to end until the coronavirus outbreak is under control.
COVID-19 will likely result in a great loss of life. How much depends on the decisions about how and when to re-open the economy–the drivers of how many people get infected. Estimates out of the Imperial College London hold that in a worst-case scenario with moderate mitigation strategies (isolating suspected infected people and social distancing of the elderly), roughly 1.1 million Americans could die. This number doubles to 2.2 million if there is no mitigation, and the economy operates as usual. Even the best-case estimate in an editorial written by researchers at Stanford is that 20,000 – 40,000 Americans will die. The White House thinks there will be between 100,000 – 200,000 deaths. Narrowing the estimate range will be critical going forward. But no matter where in that range the true number lies, many lives will be lost by re-opening the economy too soon.
I’ll let Bill Gates have the last word:
“It’s very tough to say to people, ‘Hey keep going to restaurants, go buy new houses, ignore that pile of bodies over in the corner, we want you to keep spending because there’s some politician that thinks GDP growth is what counts.’”
Joshua Rothschild