It’s official – Ebola is in New York. While Wall Street’s workers might be taking some extra precautions on their commutes, don’t expect this latest case to in any way derail the economy, according to one leading economist.
“We’re a $17 trillion economy. A few people contracting a terrible disease won’t have any impact on our economy,” said Joe Brusuelas, Chief Economist at McGladrey.
So far, just four New Yorkers have been impacted by Ebola: a doctor who recently returned from West Africa and has tested positive for the disease, as well as three people who came in contact with him.
But New York City’s health commissioner, Mary Travis Bassett has said that the risk to New Yorkers of catching the disease is next to nil.
So far, just one American has died from the deadly virus that has killed more than 4,800 in West Africa. For comparison, thousands of Americans die from the flu each year (according to the CDC estimates range from 3,000 to 49,000 people.)
The fact that talk of a disease that has had a relatively limited impact can manage to spook investors is a testament to the fragility of the bull market, said Brusuelas. “What it means is that people are riding the wave but they don’t have a real big sense of conviction about the direction of equity markets or rates for that matter.”
That means Ebola scares – like the case in New York – can send stocks down. But the blips are unlikely to last. “It will be temporary blips,” said Brusuelas. These blips will likely impact equities as well as fixed income trades – which are traditionally seen as safe havens.
Brusuelas says the big concern is less about the disease itself, and more about how equipped the government is to respond to these scares. “I think what [Americans] are concerned about is that the federal government will effectively manage this.”
In fact – the government’s response that they’re confident that this can be contained is reminiscent of former Fed Chairman Ben Bernanke’s comments in early 2007 that the fallout from problems in the subprime market was likely contained.
“Anytime anyone utters the word ‘contained,’ we are conditioned to think, ‘No it’s not,’” said Brusuelas.
It’s even had an impact on lobbyists. According to Open Secrets, 17 companies mentioned Ebola in third quarter earnings statements – and companies like Sarepta Therapeutrics (SRPT) have stepped up their lobbying efforts to get experimental drugs approved.
Sticking with Sarepta, the company spent more than $80,000 lobbying in the third quarter. That’s more than double its previous yearly lobbying budgets – which had never topped $40,000 – in just one quarter.
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