To Lift or Keep Restrictions?
The Spanish flu was a deadly pandemic that surged in 1918; some 675,000 people died in the U.S. and the economy sank. However, various local economies fared better than others. Today we can learn from the past as we face our own fears.
Nearby Cities With Longer Intervention had Higher Employment Gains​​​​​​

  • The chart above shows cities that took aggressive measures to thwart the Spanish flu as compared to neighbors that were more lax. The cities that enforced longer public health restrictions saw higher increases in manufacturing employment than their peers.

  • Minneapolis was one of the first cities to move on the news of flu deaths. The city shut itself down, closing churches, theaters, pool halls and schools, and remained shut down for 132 days. Nearby St. Paul on the other side of the Mississippi River, however, remained mostly open until three weeks after Minneapolis closed and shut down for only 28 days. As a result, the fatality rate in Minneapolis was markedly lower than in St. Paul and its economy turned out better too.1

  • Cities that implemented longer interventions didn’t suffer because they disrupted their economies longer. Many of these examples enjoyed larger gains in manufacturing employment (as shown above) and manufacturing output. Indeed, an extra 50 days of social distancing was worth a 6.5% increase in manufacturing employment in a U.S. city.2

  • As the country and the world navigate the coronavirus pandemic and consider how to mitigate its health consequences as well as its economic effects, we must balance many different perspectives in a very dynamic environment. While we do not have a solution to the problem, as investors we find looking at history to be instructive as it pertains to potential economic outcomes.



1,2Sergio Correia, Stephan Luck and Emil Verner, “Pandemics Depress the Economy, Public Health Interventions Do Not: Evidence from the 1918 Flu,” 2020.

The views expressed are the views of Fred Alger Management, LLC. as of May 2020. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, LLC. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities.

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