Ebola and the Economy

Ebola and the Economy


Just last week I did a quick 24-hour round trip from Atlanta to New York City. Thursday was the first day that a case of Ebola was reported in New York.  Friday morning I tweeted a selfie “warm NY welcome photo” of me holding a copy of the New York Post with the headline “Ebola Here!”

Nerves will certainly continue about Ebola’s potential impact but so far here are the real effects that I’ve been able to measure:

So far, no impact on economic activity. Last week in New York my hotel was completely booked, both of my Delta flights were completely full, and New York City despite the past several weeks of Ebola news including Thursday’s reported case was as bustling as I’ve ever seen it. According to NYC & Co. (NY’s official tourism group) occupancy at hotels is still close to 90 percent. Those numbers were as low at 65 percent following the 9-11 terrorist attacks. Restaurants are still packed, flights still seem full, and the economy appears to be completely resilient to the threat.

However, the stock market has proven to be much more sensitive. Despite a strong week last week in the market, from mid-September to mid-October travel and hospitality related stocks suffered tremendously, even compared to the overall stock market decline we saw. From mid-September until mid-October the broad S&P 500 dropped about 9 percent at its worst measurement. However, travel and hospitality stocks fared far worse. Delta at one point was down nearly 25 percent, Southwest nearly 18 percent, Intercontinental Hotels 15 percent, and Royal Caribbean cruises down nearly 20 percent.

A very real impact for stocks, while the actually economic activity is seeming unscathed. Remember, fear of what could happen is usually much scarier than what will happen.  I want to remind you of this as you will continue to hear more about Ebola, and see continued sensationalism around the topic.

I personally sometimes get challenged for my lack of sensationalism and pessimism. When I talked about the Perfection Misconception a few weeks ago and the fact that we are not in a recession anymore and have not been since 2009 (which 72 percent of people in the US apparently didn’t even realize), I actually received emails, phone calls and online comments saying that I was crazy to say the economy is in good shape. Here’s the thing, though; I’m looking at facts. After looking at economic data points day after day, year after year and watching the stock market rise nearly 200 percent over the last five and a half years it’s difficult for me not to be optimistic about the economic repair we have experienced since 2009.

I think it’s time that we look at those cold hard facts, and take a step away from the pessimism of the media to really evaluate the risk of Ebola in the US. I’m clearly not a doctor, but from everything that I have read and researched, Ebola is only transferable through blood or bodily fluid and is not the kind of disease that would spread rapidly in the US.   However, almost every article you read about Ebola seems to include a small,almost innocent side note that goes something like, “Ebola is a tragedy and terrible and scary but it really shouldn’t be a problem for us here in the US…unless it becomes airborne and spreads.”

When a reporter or an economist gives their “disclaimer” about how bad things could get if Ebola becomes “airborne” they make you pause and question just how likely that is to happen. Could Ebola suddenly mutate and spread through the air like in the Dustin Hoffman and Rene Russo movie Outbreak? Does the author of the article know something that we don’t know?

The answer is no.  The reporter very likely doesn’t have some super secret knowledge on this disease that has not already been shared with us. It’s similar to the reporter saying, “You’re safe to sleep in your own home and your own bed tonight…unless you get swallowed by a sink hole that’s possibly lurking under your house.” Wait a minute; does the reporter know something that I don’t know?  When you hear this disclaimer, you might get scared into thinking, “Should I be worried about a sinkhole under my house?” Sound familiar when reading articles and disclaimers about Ebola “going airborne”?

An American man was killed a few weeks ago by a camel on a beach in Mexico. When you hear about Mexico now, you probably aren’t hearing a warning to stay away from camels. That’s because even though a guy was killed by one there recently, it’s still so unlikely that people aren’t disclaiming a spread of kicking camels in Mexico.

It’s important to remember that anything could happen, whether it’s the stock market crashing, a sink hole appearing under your house, a camel killing you on a Mexican beach, or Ebola even becoming airborne. Just because it could happen doesn’t mean it will, so don’t let media disclaimers, pessimism, or sensationalism scare you into quarantining yourself from the world.   It’s better for your mental health and your wallet in all these situations to remember the Perfection Misconception, and not let these possibilities dominate your life.


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