“Estimated costs of the coronavirus pandemic are in. The results are not pretty.
A new study co-authored by Harvard economist David M. Cutler and former World Bank chief economist Lawrence H. Summers places the costs of the COVID-19 pandemic north of $16 trillion.
‘The estimated cumulative financial costs of the COVID-19 pandemic related to the lost output and health reduction are shown in the Table,’ write Summers and Cutler. ‘The total cost is estimated at more than $16 trillion, or approximately 90% of the annual gross domestic product of the US.’
As the authors explain, roughly half of the costs stem from the global recession, which was triggered by government-imposed lockdowns around the world. The remainder is the result of economic losses stemming from shorter life spans and health deterioration.
These losses are unprecedented in modern history. According to Summers and Cutler, the costs exponentially exceed previous recessions and recent conflicts in the Middle East and beyond.
‘Output losses of this magnitude are immense. The lost output in the Great Recession was only one-quarter as large,’ the authors write. ‘The economic loss is more than twice the total monetary outlay for all the wars the US has fought since September 11, 2001, including those in Afghanistan, Iraq, and Syria.’
It’s a sobering analysis. The numbers are so enormous they are difficult for the human mind to grasp, but they will have very real effects on American families and others around the world.
As the authors point out, the losses translate to about $200,000 for a family of four. These losses will hurt American families, but poor families around the world will be hit even harder. A recent World Bank study estimated that as many as 150 million people around the world will fall into extreme poverty—defined by living on less than $1.90 per day—by 2021.”