COVID-19 will cost the US $16 Trillion
A new study by two Harvard economists estimated that the coronavirus could cost the United States $16 trillion, assuming the virus is contained by the fall of 2021. This is 90% of annual US GDP and translates to a loss of $200,000 for a family of 4.
Lockdowns contributed a lot
To estimate the total cost of the pandemic, the authors summed up financial losses due to mortality, morbidity, mental health conditions as well as direct economic losses.
The coronavirus-induced recession, a big result of the lockdown, significantly raised unemployment, raising costs. As the study explains;
Since the onset of coronavirus disease 2019 (COVID-19) in March, 60 million claims have been filed for unemployment insurance. Before COVID-19, the greatest number of weekly new unemployment insurance claims (based on data from 1967 on) was 695 000 in the week of October 2, 1982. For 20 weeks beginning in late March 2020, new unemployment claims exceeded 1 million per week; as of September 20, new claims have been just below that amount.
Recessions feed on themselves. Workers not at work have less to spend, and thus subsequent business revenue declines. The federal government offset much of the initial loss owing to the shutdown, which has averted what would likely have been a new Great Depression. But the virus is ongoing, and thus full recovery is not expected until well into the future. The Congressional Budget Office projects a total of $7.6 trillion in lost output during the next decade.
Isolation and loneliness
Additionally, the lockdowns perpetuated isolation and loneliness, which when coupled with other ongoing factors, exacerbated mental health conditions among people, also raising costs.
…The proportion of US adults who report symptoms of depression or anxiety has averaged approximately 40% since April 2020; the comparable figure in early 2019 was 11.0%.5 These data translate to an estimated 80 million additional individuals with these mental health conditions related to COVID-19. If, in line with prevailing estimates, the cost of these conditions is valued at about $20 000 per person per year and the mental health symptoms last for only 1 year, the valuation of these losses could reach approximately $1.6 trillion.
It is worth noting that only a quarter of the total cost is directly attributed to premature death. The majority of the costs associated with the pandemic are, instead, health and financial costs associated with the lockdown policies. Lost GPD, for instance, makes up nearly half of total costs.
Whether the $16 trillion is realistic remains to be seen. The evidence is there, however, that the lockdown policies have been, and will continue, to be costly.