Covid-19 pandemic will cost US an estimated $16tn, Summers says

The economic loss is more than twice the total monetary outlay for all the wars the US has fought since 2001, according to the former US treasury secretary and a Harvard economist

The Covid-19 pandemic will cost the US an estimated $16 trillion, some 90 per cent of its economic output. Getty Images
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The estimated financial cost of the Covid-19 pandemic to the US economy, due to lost output and health issues is more than $16 trillion, or about 90 per cent of the country's annual gross domestic product, according to a former US treasury secretary and a Harvard University economist.

"Output losses of this magnitude are immense," Lawrence Summers and David Cutler wrote in the Journal of the American Medical Association. "The lost output in the Great Recession was only one quarter as large. 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."

The US has more than 8 million Covid-19 cases and more than 220,000 deaths, according to Worldometer, which tracks the pandemic.

As a result of health issues including premature death, long-term health impairment and mental health impairment, the world's largest economy will incur more than $8tn in costs, while the toll on GDP is estimated at $7.5tn.

A family of four will incur an estimated loss of about $200,000, nearly half of which is lost income from the pandemic–induced recession. The remainder is the economic effects of a shorter and less healthy life.

"Some individuals who survive Covid-19 are likely to have significant long-term complications, including respiratory, cardiac, and mental health disorders, and may have an increased risk of premature death," the authors said,

“Data from survivors of Covid-19 suggest that long-term impairment occurs for approximately one-third of survivors with severe or critical disease," they added.

"Because there are approximately seven times as many survivors from severe or critical Covid-19 disease as there are Covid-19 deaths, long-term impairment might affect more than twice as many people as the number of people who die.”

Wide-scale testing, contact tracing and isolation of infected individuals will help stop the spread of the disease, Mr Summers and Mr Cutler said.

The projected economic return from the test and trace strategy is approximately 30 times the cost (investment of approximately $6 million leads to averted costs of an estimated $176m), they said.