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Trump may shrug off the coronavirus, the US economy may not

A Covid-19 outbreak in one or more large US cities would inflict a September 11-level hit on the economy and a Hurricane Katrina-level hit on Trump’s popular approval.

Shoppers buy toilet paper, food and water at a store, as people begin to panic buy and stockpile essentials from fear that supplies will be affected by the spread of the COVID-19, coronavirus outbreak across the country, in Los Angeles, California on Saturday.MARK RALSTON/AFP via Getty Images

“As flies to wanton boys, are we to the gods. They kill us for their sport.” Gloucester’s despairing words in “King Lear” have been etched in my memory since I first heard them as a schoolboy. The gods also amuse themselves by sending natural disasters to humble vainglorious leaders.

The world has all four of the horsemen of the apocalypse these days: pestilence, war, famine, and death. There is, of course, the pestilence now known as Covid-19, spread by the new coronavirus. There is war in Syria and a nascent civil war in the streets of India. There may well be famine, too, if the locusts continue to ravage the crops of East Africa and South Asia. And there will surely be more death in 2020 than in a typical 21st-century year.


Fortunate is the American president who is not confronted by at least one devastating hurricane or terrorist attack or mass shooting. Fortunate is the president who does not have to console grieving survivors in at least one devastated city. But 2020 is a whole different divine sport.

We had all grown complacent about the threat posed to humanity by disease. I’m not sure quite why. The new diseases of our time did their best to remind us of nature’s supremacy over Homo sapiens. From AIDS to Ebola, from SARS to MERS, we were given repeated warnings that we were just one mutant virus away from calamity.

So just how bad is this? According to the best available data at the time of writing, there have been about 90,000 confirmed cases worldwide, roughly 90 percent of them in China and 75 percent in the province of Hubei. The implied global mortality rate is 3.4 percent, but that is surely an overestimate because the denominator (total cases) is being underestimated by infected people who don’t feel sick or don’t check themselves in for medical care.


We also believe that, unlike the “Spanish flu” of 1918-19, Covid-19 disproportionately kills the elderly and those with existing conditions such as cardiovascular disease. Worry about grandparents: the mortality rate for people in their 80s is around 15 percent, whereas a recent Chinese study found a fatality rate of 0.3 percent for those under 50. Yet those who blithely say, “This is no worse than the flu” are missing the point.

What makes Covid-19 dangerous is not so much the threat it poses to the average person’s life, but the threat it poses to economic growth. Uncertainty surrounds it because it is so difficult to detect in its early stages, when many carriers are both infectious and asymptomatic. We don’t know for sure how many people have it, so we don’t exactly know its reproduction number and its mortality rate. There’s currently no vaccine and there’s no cure. Last week, this uncertainty, crystallized by a leap in the number of Italian cases, gave the US stock market its worst week since the great banking crisis of 2008-'09.

I have often been asked in the past few years where the next financial crisis would come from. I have said time and again that it would come not from the United States but from China, now the second-largest economy in the world. Sure enough. A pandemic is very different from a bank run, to be sure. But in each case we witness the same phenomenon, which is characteristic of a networked world: a cascade of consequences driven by fear of the unknown.


Though old enough to be in the vulnerable part of the population, Donald Trump, 73, is well known for his high standards of personal hygiene (germaphobia). It is his presidency that is in danger from Covid-19 more than his life. Although his administration did indeed take the right decision early in the Chinese outbreak to limit travel from China to the United States, it did little to prepare for the eventuality of a large US outbreak. Worse, last week Trump made the mistake of playing down the risk. But it seems likely that there will soon be many more cases in the United States (the number of confirmed cases outside China continues to grow exponentially). No one knows for sure because, as we learned last week, initially there were just 200 functioning diagnostic kits in California.

As president, George W. Bush had at least four brushes with the horsemen of the apocalypse. The first, the September 11 terrorist attacks, dealt a severe but temporary blow to an economy that was already in recession. Newly elected and initially blindsided, Bush struck the right notes of defiance and vengeance and experienced a surge in popularity. The second was the war of choice he launched against Saddam Hussein. Fortunately for Bush, he got reelected before the public mood had truly soured on the Iraq War. Then, in 2005, came Hurricane Katrina, which would have made him a one-term president if it had happened a year before. Finally, there was the financial crisis, which drove his popularity down to its nadir and doomed Republican nominee Senator John McCain’s attempt to keep the White House in Republican hands.


A major Covid-19 outbreak in one or more large US cities — comparable to the one in northern Italy — would inflict a September 11-level hit on the US economy and a Hurricane Katrina-level hit on Trump’s popular approval. The fact that the principal beneficiary in that scenario would be a lifelong democratic socialist committed to universal public health care must be the kind of thing the gods find entertaining.

Niall Ferguson is the Milbank Family senior fellow at the Hoover Institution at Stanford University.