Will the Coronavirus Cause a Global Recession?

The coronavirus has done more than cause an estimated 82,000 illnesses in more than 40 counties. As well as 2,700 deaths.

As it spreads globally, it is disrupting supply chains. And decreasing product sales. It's making travel chaotic for most and impossible for some.

The coronavirus is also wreaking havoc with the stock market. Which is increasing fears of a worldwide recession.

It has not yet been declared a pandemic. But last week the World Health Organization raised the coronavirus global risk level to "very high."

Businesses Plummeting

China is where the coronavirus started. And where it has caused the most illnesses and deaths. This country is so involved in the world's economy that supply distribution has been greatly harmed.

As an outcome, many groups are getting hit hard. They include Apple and Nike. And many others around the world.

Global investment firm Goldman Sachs is concerned about the virus' potential. It has revised earnings growth estimates for U.S. groups in 2020 to zero.

David Kostin is the group's chief U.S. equity strategist. He told people last week that "U.S. companies will generate no earnings growth in 2020."

Supply Chains Breaking

American stores in China are feeling the brunt of the virus. Lockdowns in several China cities have kept people off the streets. And out of shops.

About one-half of Apple stores there are closed. Starbucks closed 2,000 of its China locations.

A number of U.S.-based luxury labels are also feeling the crunch. They depend on Chinese people.

One firm predicted that luxuries will lose $43 billion in sales this year.

Travel Industry & Amazon Suffering

Other industries suffering due to the virus spread are travel and tourism. Travel bans and warnings – as well as anxiety about contagion – are hurting airlines.

Delta, United and American have suspended services between the U.S. and China until the end of March. United is reducing flights to Japan, South Korea and Singapore.

Cruise lines, hotels, casinos and tour groups are also troubled. Even many of the 2.5 million sellers on Amazon are experiencing setbacks. Many rely on inexpensive items from China.

Patrick Maioho provides kitchen items on Amazon. Here's what he told The Wall Street Journal recently.

"I don't think the Amazon platform has seen such a massive amount of inventory problems as we are about to see."

Diet Soft Drinks Dwindling

Because of factory shutdowns in China, we might start seeing less Diet Coke on store shelves. As well as other diet soft drinks.

Those shutdowns are causing delays in the production and export of sweeteners sourced from China.

Owners of these factories are torn between the desire to keep their people safe and the necessity of staying in business.

Coca-Cola's annual report says there is uncertainty around the duration of its disruptions. And so the harm on their business are unknown.

Stock Market Getting Hammered

On February 12, the Dow Jones Industrial Average peaked. Last week – the worst week on Wall Street since the 2008 financial crisis – it lost 3,583 points. For a 16.3 percent drop.

The S&P 500 plunged 11.5 percent last week. The Nasdaq was down 10.5 percent for the week.

Many investors have moved their money into safe government bonds. That has driven the 10-year Treasury yield to all-time lows.

Paul Christopher is head of global market strategy at Wells Fargo Investment Institute. He told NPR, "It's unprecedented... Even if you go back 70 years, we've never had a correction... develop so quickly."

Will This Become a Recession?

It's possible a one-half percentage point interest rate cut could be enacted by the fed soon. But that would probably just be a bandage on the problem. And some believe rates are already too low.

Will the virus continue to spread and become a major problem in the U.S.? As it has in other countries? If so, the entire global financial community is in trouble.

Kevin Hassett is a former White House economist. Last week he told CNN that the world economy could fall into a recession if the outbreak is not contained soon.

"If people are able to spread it outside of the flu season, then this has legs through the summer. And you're absolutely looking at a recession globally," he said.

A Threat to the Global Economy

Janet Yellen agrees. She's the former chair of the Federal Reserve. She said the aftershocks from global economic weakness could "throw the United States into a recession."

A recession is usually defined as two consecutive quarters of negative economic growth. That growth is measured by gross domestic product. Which is the total value of final goods and services produced within a quarter.

Whether the U.S. spirals into a recession is dependent on two things. How far and wide the coronavirus spreads here. And how the government handles it.

Rohan Williamson is a finance professor at Georgetown University's McDonough School of Business. He told the news site Vox, "It's a potential threat to the global economy as it goes on longer."

None of us knows how much the coronavirus will spread. Or how many people it will sicken in the U.S. But we do know the importance of preparing for an emergency. Take the steps you need to now.

 

Previous article 5 Overlooked (But Much-Needed) Bug-Out Bag Items
Next article Not All See the Light When It Comes to Power Outage Dangers

Comments

Nancy Mills - March 13, 2020

I’m watching the Covid-19 virus situation with a mix of caution and cynicism. The media and Stock Market have always been Chicken Little’s “the sky is falling”.
Our global economy is showing its weakness both in health issues and supply lines. I’m fortunate I was raised by Depression Era parents who taught me to prepare and be as self reliant as possible. My ‘survivalist’ instinct says double check my preps (which I have ) and keep informed. Thanks 4Patriots for providing quality products for such a time as this.

Steven Jewett - March 10, 2020

First, Thank You so much for the heads up!! I have been putting off getting a generator for the reasons you discussed in your literature i.e. fuel, smell, noise etc. when I saw the Patriot Gen-Set
there was no hesitation in my mind. You even covered potential EMP….what more could anyone ask for?

I bought the 3 month supply of food before Corona V was on the scene! These were not panic purchases; They were prudent purchases that will last the rest of my lifetime and maybe into my Children and Grandchildren’s lifetimes if I don’t use them…the Generator if nothing else.

No one can say what the Bacterial/Viral entity will do to our environment, nor how we will survive it. The only Sentient being that would know is GOD and he already gave his answer.

I feel great empathy and great sympathy for those who believe only in this finite speck of time on Earth. I empathize in a way, yet don’t believe in their feelings of finality after this life. What ever happened to thinking outside the “Box”?

I Sympathize with the fact that “The I Am” is so very much more than we are capable of knowing completely in our limited capacities, that those who “Don’t” believe in “Ever After” are limited to nothing after. Such a narrow Vision of Humanity………..

Life is a Gift?! If not why is everyone trying so hard to keep it to the last day?

The more who prepare themselves to protect and support each other…..The longer Humanity will survive. It’s really that simple isn’t it??!!

P.S. I’m 71.

Charles Fulton - March 9, 2020

JUST FOR THOUGHT
If this is not a plot against the American economy, why hasn’t anyone posted the flu numbers
beside the corona numbers?

Ronald Martin - March 9, 2020

This problem reminds me of Y2K back in 2000 when they didn’t know if tomorrow would come or not, all one has to do is make a statement about a certain thing one thing turns into another, I think this is along the same lines as that was, look at the deaths that the flu has on people every year over 36000, corona virus is not a new thing just a different strain, I do think they can get this under control quicker than what they are saying, remember this is an election year just saying

Leave a comment

Comments must be approved before appearing

* Required fields