Submitted by Tyler Durden on 10/17/2014 14:42 -0400
News about the spread of the Ebola virus has been an increasing focus for market participants in recent days. Despite rising media coverage, Ebola seems to have had little discernible effect on consumer sentiment to date. However, as Goldman Sachs notes, the "fear factor" associated with Ebola appears more significant than in past instances of pandemic concern. While expert opinion sees the likelihood of a significant outbreak of Ebola in the US as very low, it is likely any negative macroeconomic consequences are most likely to be transmitted through fear or risk-aversion channels.
Via Goldman Sachs' Jan Hatzius,
News about the spread of the Ebola virus has increasingly been a focus for market participants in recent days. Prompted by client questions, our equity analysts have written on the effect of Ebola on airline stocks in the US and Europe, as well as hotel and cruise line stocks. The most important cost of the Ebola outbreak in West Africa has been the tragic and rising loss of human lives. In today's Daily, however, we focus on the potential for broader US macroeconomic effects of Ebola fears.
Exhibit 1 shows that public concern about Ebola—as reflected in Google searches—spiked around the time the WHO declared an Ebola emergency in August and again after the first case was reported in the US at the end of September. However, despite rising public interest in the disease, there has been no discernible effect on high frequency measures of consumer sentiment. The daily Rasmussen confidence index has been relatively range-bound since early September. The daily economic confidence index from Gallup (not shown) has actually risen over this period.