Friday, October 30, 2009

Will H1N1 derail the "economic recovery"?

I really do not believe that the economy is recovering, which is the reason for the quotes in the title.

The global ecomomy was pushed off of a mountain last Fall and it fell for a long time, hitting hard outcroppings all the way. If finally hit bottom and it is now stumbling along the very rough terrain of the valley floor heading for the next peak. It is not even close to reaching the point where it can begin climbing to that peak but it is moving that way. While it is doing so will a big boar come out of the underbrush and knock it back on its ass again?

Ok, I think I have taken that analogy far enough.

I ask this question because I am seeing a significant drop in productivity at my place of business as a result of H1N1. So far only one person in my organization has been away as a result of a confirmed case of H1N1. He came through alright and he is back to work. However, the number of people who have taken time off because of normal seasonal illnesses, either for themselves or in their families is quite a bit higher than last year. We had one situation where one member of a team was coughing and hacking. It was just a chest cold but he finally said the heck with it and took a day off. That very same day 4 out of 5 of his fellow teammates took the day off as well, even though they were not sick but just worried that their sick teammate would make them sick. That is five lost person days that can be attributed to the fear of H1N1 but not the actual virus.

I wonder if this is happening elsewhere?

Regardless of how bad this outbreak actually becomes, just the fear of it seems to be causing work disruptions. We are still early in the season, could these disruptions become longer and more widespread? I believe they could and if it does happen then I think we can count on the economy not showing consistant signs of recovery until at least the Fall or even beyond.

Why the Fall?

The flu season will last until Spring. Any distruption it creates will probably not work through the economy until late spring, early summer. On April 1 we will see the beginning the the new fiscal year for the government, which mean most of the stimulus funds that are being spent right now will dry up. The stimulus package was meant as a short-term tonic for the economy and most of it was slated to be spent in this fiscal year. The amount slated for next year is much smaller. Incidentally, this is true for most of the developed world.

So possibly before the economy fully works through the effects of H1N1 the funds that have managed to smooth the sharper edges of the recession will be removed. I cannot believe that combination will create the best conditions for an economic recovery.

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