The COVID-19 pandemic will exact a $16tn toll on the United States four times the cost of the Great Recession, when adding the costs of lost lives and health to the direct economic impact, said a former US Treasury Secretary, Lawrence Summers, and Harvard University economist, David Cutler.
According to the duo in an essay cited by Bloomberg, about half of that amount is related to lost gross domestic product as a result of economic shutdowns and the ongoing spread of the virus.
The other half comes from health losses including premature death and mental and long-term health impairments. Cutler and Summers wrote in the essay published online on Monday in the Journal of the American Medical Association.
“The immense financial loss from COVID-19 suggests a fundamental rethinking of government’s role in pandemic preparation,” the authors wrote. “Currently, the US prioritises spending on acute treatment, with far less spending on public health services and infrastructure.”
They explained that the $16tn was equal to about 90 per cent of annual US GDP, and more than twice as much the US spent on wars since September 11, 2001, including those in Afghanistan, Iraq and Syria.
According to the authors, policies including wide-scale population testing, contact tracing and isolation can reduce the spread of infection and prevent some of these losses, noting that spending on testing and tracing strategies is about 30 times less expensive than the projected economic cost without those policies.
