This pandemic began in China in late 1956 or early 1957, and by the summer of 1957 it began to spread around the world. Ultimately, it would kill an estimated 1-2 million people. By October, it was in full swing in the United States. The first wave that fall affected mostly school children, and some schools were closed. But few children died. A second wave in early 1958 was more deadly, affecting in particular pregnant women and elderly people with pre-existing conditions. Estimated US deaths ranged from 70,000 to 116,000.
In 1957, the Dow Industrials peaked on July 12 and then dropped 19.4% to a low on October 22. Curiously, the flu outbreak typically was not cited by the media as a factor in the market downturn. It soon became apparent that the US economy entered what would prove to be a mild recession in August 1957, one that would last through April 1958.
When the recession began, the pending flu problem was known to health experts and officials, and they were on top of the flu epidemic before it hit the United States. Indeed they already had developed a vaccine, which was well reported in the press. Even though supplies of the vaccine were initially limited, undoubtedly it was encouraging to investors and others to know that a vaccine existed.
The sharp stock market decline began before the recession and before the public, if not scientists and officials, became aware of the flu problem. It thus proved its worth as a leading indicator. Better reasons for the late October lows were a confrontation that fall between federal officials and Arkansas’s governor over the integration of public schools, and especially rising Cold War tensions.
On October 4, the Soviet Union successfully launched its Sputnik, the first man-made satellite to orbit the Earth, prompting considerable American angst and investor consternation. Later that fall, President Dwight Eisenhower suffered a mild stroke, and the failure of an American test rocket put a damper on the market’s recovery from its October low.
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International Ladies Garment Workers Union Local 105 members receiving flu shots on December 12, 1957