What effect, if any, did the Spanish Flu pandemic have on the US economy?

by Friedastrochicken
sithlordofthevale

Quite a bit on a local level, but economic setbacks were overshadowed relatively quickly by the economic boom of the 1920s, and the stock markets were not affected nearly as much as they could have been if a war hadn't been going on. There were really no global supply chains for the virus to disrupt thanks to WWI. The problem is that a lot of data relating to income and employment from this time period is not available. Primary sources covering the pandemic in the U.S. are also scarce.

It's important to note that we don't know the exact origin of the 1918 influenza pandemic, but it most likely was not Spain, and could very well have been the U.S. Many countries involved in the European theatre censored stories related to flu outbreaks or mentions of a pandemic during WWI, but Spain was neutral and published all kinds of harrowing stories, leading the world to attribute the origin of the virus to Spain.

Part of the reason it is impossible to fully trace (and was so deadly) is due to outbreaks peaking at the height of WWI. Regardless of where it actually originated, the US military unquestionably played a large role in its spread. Camp Funston in Kansas, for instance, housed 54,000 soldiers. In March of 1918, over one thousand were hospitalized and 38 died of pneumonia. Similar outbreaks are recorded at bases and training camps across the country. Then, they all deploy to Europe. Even by the most conservative of estimates, a million soldiers (26% of total troops) became infected and 30,000 died - before ever reaching France. This has drastic affects on manpower, causing more need, enlistments, taking more healthy men and women away from home, and while not necessarily affecting the unemployment statistics, this impacted many communities a great deal.

A paper published in 2007 by the Assistant VP and Economist at the Federal Reserve Bank of St. Louis aggregates information from newspapers during this time (see page 19). Some highlights:

  • Merchants in Little Rock estimate business has declined 40%, some say 70%
  • Little Rock businesses were losing $10k a day on average (roughly $187k today).
  • Industrial plants in Memphis were running at a great handicap.
  • Physicians were too busy combating the disease to report the number of their patients.
  • The Cumberland Telephone Co. reported more than a hundred operators absent, asking unnecessary calls be eliminated.
  • A rural town in TN reported having "only 2 percent of well people."

Again, these effects were largely short-term. Interestingly, research on in utero exposure to the virus suggest there are long-term economic effects. From the abstract:

Data from the 1960–80 decennial U.S. Census indicate that cohorts in utero during the pandemic displayed reduced educational attainment, increased rates of physical disability, lower income, lower socioeconomic status, and higher transfer payments compared with other birth cohorts.

I highly recommend American Pandemic by Nancy K. Bristow for further reading.