In my opinion the growing Swine Flu epidemic is becoming President Obama's personal Katrina.  Criticism for President Bush came almost immediately following the hurricane disaster in New Orleans.  He was criticized for not being prepared, not spending enough money, the failure to predict where the hurricane was going to hit, and maybe even for not issuing a stern enough warning to evacuate the city. (Yes I believe that a few of the deaths could have been avoided if the people had just evacuated as ordered.)

All tolled, it’s been reported that 1836 people lost their lives in Hurricane Katrina.  Last week, it was reported that the 1000th person had died from Swine Flu in the United States.  This weekend President Obama declared the Swine Flu epidemic a national emergency.  The problem I am having with this is that the Obama administration had at least six months to prepare for the current outbreak.  I have been reading that the Swine Flu vaccine is not available in all areas of the country.  I have also seen warnings that there will be shortages.  Instead of worrying about the National Healthcare Plan, he should have been worrying about the health of the nation.

President Bush only had hours to decide beforehand when and where hurricane Katrina was going to reach landfall.  President Obama has had months to prepare for the Swine Flu breakout.  Something is wrong with this developing scenario.  At some point, maybe when the Swine Flu deaths exceed the Katrina death toll, I expect an apology from President Obama for not being prepared and not directing enough resources to ensure that everyone, not just pregnant women, the elderly and children, had access to the flu vaccine.

Investors should begin to prepare for the worst.  Since the President has decided that the Swine Flu epidemic warrants national emergency status then I have to believe that it is probably more serious than we are being told.  My only criticism is that the President should have used prime time TV to issue the declaration.  This is a serious matter and could have a tremendous impact on the economy at a time when the nation can not afford a set-back. 

It is possible that schools, businesses, factories or even malls could be shut-down if this epidemic gets out of control.  Think about all the people that touch shopping carts.  Do you know of anyone who uses an alcohol wipe on a shopping cart before they touch it? Do you even think twice about touching it?  The retail sector which is already hurting because of the slowdown in consumer spending during this recession could be hit a second time since the credit crunch began.  The timing of this, right before the start of the Christmas shopping season, could prove to be disastrous for the economy or at least prove to be a major bump in the road for our recovery out of the recession.  I don't think the Fed, the Treasury or Congress have the power to order people to shop and spend especially if consumers decide to stay home to avoid this deadly illness.

Beside the retail sector, investors should also consider the Swine Flu's possible effect on the travel and restaurant industries.  It has been reported that the virus can travel up to ten feet.  Think about how many in a 10 foot radius could be infected on an airplane.  What will the choice be, quarantine the whole plane?  China did this several months ago.  And if you think flying takes long now, just wait if travelers are required to have their temperatures taken before boarding a plane. Yes, one symptom is a high temperature.  Beside checking your stocking feet for explosives, airport security will now have to learn to read an oral thermometer.  Again these are things to consider if the Swine flu gets out of control. 

As far as restaurants are concerned, menus are a great place for this virus to manifest.  Do you really think that restaurants clean their menus?  Think of all the hands touching the menus.  Think of all the menus which touch plates and eating utensils.  Once again from an economic standpoint, news of this disease spreading through restaurants can cause people to stay home.  This may hurt sit down restaurant businesses. 

At this time investors shouldn't panic, but should be aware of the possible economic impact the Swine Flu can have on the economy. It's always best to be prepared for the unknown.

Finally, not all of the news is potentially bearish.  Companies that sell anti-bacterial hand-washing products may see a surge in sales.  Companies that sell protective masks or rubber gloves may also see windfall sales.  Online shopping sites could see the biggest economic boost if consumers decide to stay home during this Christmas shopping season. Last week the stock market reacted hard to the downside when news hit that Wal-Mart was looking for a "rough" holiday spending season and was considering drastic price cuts.  Can you imagine what could happen to the stock market if the Swine Flu kept consumers away from malls and shopping centers?

Once again I didn't declare this a national disaster, but something may be brewing which indicates conditions will worsen.  It's just good risk management to be aware of the possible economic impact this flu season could have on your portfolio.