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Study: Flu outbreak in U.S. could spark recession

Story Highlights

• Severe pandemic could kill 2.25 million people, study says
• 87.75 million people would miss about three weeks of work
• GDP would drop about 5.5 percent, a $683 billion loss
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WASHINGTON (CNN) -- A severe flu pandemic "would almost certainly lead to a major economic recession," according to a new report from a nonpartisan, nonprofit organization.

The report, titled "Pandemic Flu and the Potential for U.S. Economic Recession," projected that a pandemic would kill 2.25 million people and force 87.75 million people to miss work for three weeks

That could cause the U.S. gross domestic product to drop more than 5.5 percent, resulting in an economic loss of $683 billion.

"The U.S. is not prepared to face an economic shock of this magnitude," said Jeff Levi, executive director of the Trust for America's Health, which issued the report. "While important government preparedness efforts focusing mainly on medical and public health strategies are under way, efforts to prepare for the possible economic ramifications have been seriously inadequate. Stepping up pandemic preparedness is vital to our national and economic security." (FIve flu myths debunked. )

In an average year, real GDP grows at a rate of 3.5 percent.

"If everything else is held constant, a severe pandemic could lead the U.S. economy to contract by 2 percent," the report concluded. A recession is defined as a contraction of the economy during at least two consecutive quarters.

In 1918, a flu pandemic killed more than 675,000 people in the United States. Milder outbreaks struck in 1957 and 1968.

Health experts say another flu pandemic is inevitable. They worry most about the possibility that the highly pathological H5N1 strain of bird flu could mutate, gaining the ability to spread easily from person to person.

The report said a severe outbreak would make at least 30 percent of the population ill, and would kill at least 2.5 percent of those who got sick. In the United States, that would translate into 90 million people getting sick and 2.25 million dying.

The report studied the potential impact on each state, and found the average state would suffer a 5.5 percent hit to its economy, with Nevada's economy facing the biggest drop in GDP (8.08 percent), in large part because the state is so dependent on tourism and entertainment. The Maryland economy would be least affected (5.09 percent drop in GDP), the report predicted.

The Trust for America's Health based its conclusions on studies by the Congressional Budget Office, the Australian National University/Lowy Institute and BMO Nesbitt Burns, an investment firm.

CBO estimated the impact of a severe pandemic on GDP at 4.25 percent, ANU/Lowy Institute estimated at 5.5 percent and BMO Nesbitt Burns at 6 percent.

All three organizations based their conclusions on a number of assumptions, including the severity of the flu strain, the time frame, lost labor productivity, the epidemic's impact on health care and its effect on demand for products and services.



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