Will the post-coronavirus economy come roaring back? Lessons from the 1918 pandemic and the Roaring ’20s
From 1918 to 1920, the Spanish flu pandemic killed hundreds of thousands of Americans and millions worldwide. Yet the U.S. emerged with a roaring economy in what became known as the Roaring ’20s. What lessons can we take away from that crisis 100 years ago?
Video Transcript
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- In the United States and around the world, an epidemic is spreading. Drastic steps are taken by cities nationwide. Schools, churches, and theaters are closed. Sporting events are canceled. And people are encouraged to avoid crowds, avoid public transportation, and avoid anyone with symptoms of a cold. They're basically asked to social distance. Sound familiar?
The year was 1918, and some of the same public health measures that were used to combat the Spanish flu are being used today to combat the coronavirus pandemic.
DONALD TRUMP: Just a terrible thing, the likes of which we haven't seen, I guess, if you go back over a hundred years.
- Many businesses and schools across the US have closed to stem the spread of the virus. But it's up to individual states to determine how long those closures should last.
ANDREW CUOMO: The states have the power to open. The states are opening on their own time lines.
- Groups of protesters have been popping up across the US, demanding lockdowns and social distancing measures be lifted.
- We the people of this great state will be heard. Reopen North Carolina.
- As unemployment rates climb--
- --record-breaking jump in unemployment claims.
- 30 million people out of work.
- We're talking one in five workers in the United States in the space of six weeks now out of a job, furloughed, or frightened for the future of their job.
- But states could be taking a significant risk if they try to ease coronavirus restrictions too quickly. In 1918, bans on nonessential gatherings were also common, but it was up to individual cities and states to determine what restrictions to put in place. In September of 1918, Philadelphia decided to go ahead with a massive parade that was intended to raise money for the war effort. Days later, Philadelphia had hundreds of new cases. More than 12,000 people died in six weeks.
Both the pandemic itself and the restrictions that came with it were undoubtedly a burden for Americans 100 years ago, but those restrictions may have played an important role in the long run, both in saving lives and saving the economy. A recent paper by economists at MIT and the Federal Reserve found that cities that implemented earlier and more aggressive social-distancing measures not only reduced deaths, their economies actually bounced back faster once the pandemic was over. They found that implementing public health measures for an additional 50 days increased manufacturing employment by 6 and 1/2% after the pandemic and lasted into the early 1920s as the US entered a new roaring decade of prosperity.
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The authors of the paper caution against using Spanish flu to make conclusions about the coronavirus. But they say there is a lot we can learn from the pandemic 100 years ago as we battle a new pandemic in the 2020s.