ANALYSIS: Ebola Fears, Rational or Irrational, Could Cause an Economic Fallout

Stephanie Kelton is supposed to fly to Dallas this week. She already has her plane ticket. But she’s seriously thinking of driving instead.

“I don’t want to be irrational, but at the same time, I’m not entirely comfortable with the idea of getting in an airplane right now,” said the economics-department chair at the University of Missouri-Kansas City. “I’m trying to decide if I want to bite the bullet and buy my peace of mind instead.”

In a Harris Poll/HealthDay survey of Americans this month, nearly one-fourth of the respondents said they might change their holiday or business travel plans because of Ebola fears.

Kelton is among the millions of Americans who have begun making economic decisions with Ebola in mind. Though driving instead of flying might actually cost her more, many others are instead choosing to spend less, canceling planned trips or other spending.

There have been only three cases of Ebola diagnosed in a nation of 310 million people, but economists are concerned that the actual costs of treating the victims and containing the disease will be far outstripped by the cost of fear that slows the economy.

“For me, as an economist, the biggest risk to the nation is not the disease itself, but the reduced spending a panic might result in,” said Frank Lenk, chief economist at the Mid-America Regional Council.

The growing national anxiety over Ebola has been driven in part by the stumbling response to the first case in Dallas by the hospital involved and the Centers for Disease Control and Prevention, a daily barrage of sometimes politically driven media coverage, and daily news events.

In Belton, Texas, three schools temporarily closed on Friday for disinfecting because two students had been on the same flight as a nurse who since has been diagnosed with Ebola.

Also on Friday, reporting “an extreme abundance of caution,” Carnival Cruise Lines said a cruise-ship passenger, a lab supervisor from the Dallas hospital that treated the Ebola patient who died, was in isolation on a ship near Belize. The woman had shown no signs of disease and was considered “very low risk,” but the cruise line was intent on minimizing any risk to other guests or crew.

President Barack Obama sought to allay the fears over Ebola on Thursday, saying, “I understand people are scared. I do want everyone to understand it remains a very difficult thing to catch. The risks involved remain extremely low for ordinary folks.”

The direct cost of the deadly disease, of course, will be to victims, hospitals, doctors and nurses. The University of Kansas Hospital had a preview last week of the higher direct-care costs when it ramped up procedures to care for a possible Ebola patient who was determined within two days to not have Ebola.

Other costs will weigh on those trying to contain the disease by tracking down people who have had contact with victims or their health-care workers.

But given that a minuscule percentage of Americans have actual contact with the infectious disease, most will be more affected by a possible economic slowdown. Lenk said a reduction in consumer spending caused by fear “could cause the rate of recovery to slow, stop or even reverse, depending on the amount of spending withdrawn.”

Some economists said Ebola fears, in part, dragged the stock market down last week. Airline stocks in particular have fallen this month.

As the American public becomes better informed about Ebola and its transmission, some fears may ease. But Americans also may need a better understanding of geography.

A caller to the Kansas City Star expressed concern about riding in Kansas City-area cabs or airport shuttle vans because “the drivers are from Somalia.” Told that Somalia isn’t one of the countries plagued by Ebola, he persisted that, well, they’re from Africa.

Nor was he allayed by the fact that the drivers probably have been in the United States for far longer than the Ebola incubation period.

This article appeared in print in the October 20th, 2014 edition of Hamodia.