Will The Swine Flu Hurt U.S. Economy Even More?
MICHEL MARTIN, host:
I'm Michel Martin, and this is TELL ME MORE from NPR News. Coming up, we'll tell you about sexting. It's a practice of sending explicit or provocative photos through cell phone cameras. We'll talk to the moms about this and we'll talk to a school administrator whose career was nearly derailed when he tried to address it at his school. We're going to talk about this in just a few minutes.
But first, we're going to continue our conversation about the swine flu outbreak that's currently raising alarms around the world. As we just discussed in our last segment, the World Health Organization has raised the alert level, warning that swine flu could become a pandemic. The group also recommends that countries refrain from closing borders or restricting travel. The outbreak could not come at a worst time for a global economy that's still stuck in recession and now flu fears are threatening to shut down travel and complicate trades. We wanted to ask how all this could affect the U.S. economy and the global economy.
So, who better to ask than Alvin Hall. He is our regular contributor on matters of the economy and personal finance, welcome back.
Mr. ALVIN HALL: Glad to be here from London.
MARTIN: Yes, I was going to ask, now that you are in London, working over there, how is this being covered there? Is this considered a big story there? How are people reacting?
HALL: It's a huge story. In fact this morning on the major newspaper it said that the epidemic was quite broad in the U.S. and that a minister from Spain recommended that travel to the U.S. be restricted because of the amount of flu that's showing up there. It's quite big news over here.
MARTIN: Well, I think that people here would consider that an exaggeration. In fact on Monday, the European Union appeared to issue and then rescind a ban to travel to the U.S. The U.S. is very big country.
MARTIN: And there have been no fatalities and there have been…
HALL: Only mild cases.
MARTIN: …mild cases. So, the question is, why is that? Why are they recommending such stringent measures?
HALL: I think the Spanish minister of health was sort of speaking off the cuff and saw it as being a bigger problem than it actually was. Also, I think it's a lady who said this, that she saw this wave of disease coming across our borders with Mexico because of the way the U.S. hasn't chosen to close down those borders yet. So, I think it was more of an off-the-cuff comment that had very little validity to the size of the U.S.
MARTIN: Well, that raises an important point though, which is, do you feel, are there signs that travel and trade are being affected, even by this kind of, well, misinformation?
HALL: I think that people are looking at the U.S. and thinking, if I'm going close to Mexico, maybe I want to rethink this. But overall, I think in the major cities, New York, Chicago, L.A., even parts of Florida, people are not changing their plans. I think the Europeans in particular have a much more balanced view of a possibility of death in their lives. I think in America we fear death profoundly. And I think over here people say, oh, if I go over there I'm going to have a good time, and I die having a good time, that's okay.
MARTIN: Now, we're just entering the summer travel season. Are the concerns about the impact on the economy more about trade or more about tourism travel?
HALL: More about tourism travel. The summer is a big time in the U.S. for tourism. You're in New York City, any of the big cities in America, you go out to the Midwest, you see people driving across America. It's a big time. So, if people start canceling their trips to the U.S., the first impact will be the airlines. And as we know, the airlines have been losing money, losing money and they expect it to get worse over the summer. Then you have the hotels. I live in New York City, as you know. And hotel prices have been dropping because there hasn't been that demand there.
Go on to transportation, other forms of transportation. Car rentals would be down. Restaurants would be affected. You also have tour companies being affected. Another impact, Michel, in the U.S. is of course the strengthening dollar. So, that along with fears of a disease, along with greater expense means that people might think twice before they come to the U.S. this summer.
MARTIN: The strengthening dollar meaning that it's more expensive to buy U.S. products or to come here.
HALL: Exactly, because the dollar has strengthened against the Euro. It's stronger against the British pound. It's not at the historic levels we've seen in the past. But it's still pretty good. So, for those people coming to the U.S. which used to be such a bargain, now it's expensive.
MARTIN: It sounds to me though like you're saying that there are potential impacts but the current impacts are fairly minimal. Is there anything that U.S. leaders can do to protect the economy from significant fallout?
HALL: Yes, they are doing some things right now. The government has been very measured in its response. Obama said that this was an issue of concern but not something we need to panic about. So, this provided a nice balance to what the Spanish minister said. And it, I think it gave Americans a very balanced perspective. This is not something we need to panic about at this point.
MARTIN: Well, what does that matter, though? From an economic perspective what does that matter?
HALL: Because people will often take that information and it will cause them to change their plans. Oh, if I go to this country, I may get the disease. I want to stay home this year. I don't want to travel. If people stop traveling at the rumor of any disease, the knock on affect in the U.S. economy could be amplified because we do not have a great deal of wiggle room, given the recession and the impact it has had on company profits.
MARTIN: Alvin Hall is our regular contributor on matters of personal finance and the economy. He joined us from London. Alvin, thank you.
HALL: You're most welcome.
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