Calculating flu costs
Today, between the flu vaccine, antiviral medicines developed to lessen flu symptoms, and the ever-increasing array of over-the-counter cold medications, most of us view the flu as a miserable but manageable illness. However, it is responsible for substantial mortality and loss of productivity in the US each year. The CDC reports that since 2010, the flu has resulted in 9 million to 45 million illnesses, 140,000 to 810,000 hospitalizations and 12,000 to 61,000 deaths annually.
Given that the CDC reports that roughly 60% of flu illnesses occurred within the working age (18-64) population from 2010 to 2016, lost wages and productivity are also concerns. In fact, US employees miss more than 111 million workdays a year due to the flu. Those numbers are unlikely to decline, because many adults remain unvaccinated. Vaccination coverage varies by state, according to the CDC, ranging from 33.9% to 56.3% among adults and between 46.0% and 81.1% for children.3
The most comprehensive study of the flu’s impact on the US economy was published in 2007. It found the flu responsible for an average of $10.4 billion in direct medical costs and over $16 billion in lost earnings each year. That resulted in an average total annual economic burden of more than $87 billion for the US economy. And in some years, the cost hit $150 billion.4
Pressuring the US consumer
Will the flu trigger a recession? Absolutely not. But the flu’s severity and timing could add to the pressures building on the US consumer -- especially as the flu tends to hit hardest early in the new year, after the hefty deductibles on the increasingly prevalent higher deductible insurance plans have reset.
Burdening the consumer is significant because US GDP was entirely driven by the consumer in 2019; business investment was stymied by trade and geopolitical uncertainty. Falling interest rates allowed some consumers to deleverage last year, but the rate of non-mortgage debt has risen slowly, and the six-month moving average rate of job creation has also slipped.
The Conference Board now suggests that consumers’ support for the economy is likely to fade over the course of 2020 as personal income growth slows and short-term expectations for jobs and financial prospects diminish. Therefore, unless we see a meaningful reversal in business confidence and expenditures, US growth could catch the chills.