It’s been a few weeks since the first confirmed cases of COVID-19 outside of China, and the economic damage is finally beginning to sink in.
Workers in China have been under quarantine for weeks, following the outbreak of the virus in Hubei Province. Chinese exports have taken a double-digit hit and imports are down as well. As the Chinese economy goes, so goes the world economy. China, as the second-largest economy and largest manufacturing economy, is integral to much of the global supply chain.
That has spelled trouble for US and world markets. All through the week of UTM’s spring break in early March, the Dow Jones Industrial Average has been in rout. Mon., March 9, saw a sell-off so steep on the New York Stock Exchange that it tripped the “circuit breaker” that temporarily halted trading for 15 minutes. By the end of the day, the Dow had closed down over 2,000.
Markets in Italy fell 10%, in Norway 8.9%, in Spain, France, Germany, the Netherlands, and Saudi Arabia over 7%.
Much of the damage was compounded by a crash in crude oil prices to the lowest levels since the Gulf War, triggered by a breakdown of an alliance between Russia and the Organization of Petroleum Exporting Countries (OPEC). The price of a barrel of crude by the end of Mon. saw its steepest fall since 1991.
Today, markets are being buoyed as President Trump has floated the idea of a 0% payroll tax through the end of the year. The commentariat is, as of yet, divided on the effectiveness of this plan, but nevertheless it seems clear that Trump’s reelection is riding on his ability to deliver the country from COVID-19 with minimal damage to the economy.
Politicians are fretting about the stock market, but at the end of the day: people’s lives are more important. The American people will be able to tell who is really their friend in government based on who is willing to take an economic hit to protect the public.
