In case you missed it, stock markets around the world gave in to the panic over the coronavirus yesterday as investors are showing little confidence in the government’s ability to stem the growing epidemic.
The U.S. stock market fell 1000 points — the third biggest drop in history. In Europe, the story was the same as new cases of the virus in Italy, Austria, and Croatia have sent investors scurrying to safety.
One market analyst was blunt in his assessment: “Fears over a potential coronavirus contagion throughout Europe is likely to provide substantial risk-off sentiment for days and weeks to come, with significant pressure on the Italians to stop this outbreak from spreading throughout the continent.”
The problem for world economies is uncertainty. Just how bad is it going to get? That uncertainty feeds fear in the markets which reflects on broader economic activity.
The economic effect on China could be catastrophic. There are already 200 million people under quarantine there, which means they can’t work, and they can’t go to the store to buy things. The economic slowdown could easily start a domino effect in Asia with other economies being dragged down by China.
For Donald Trump, the danger is twofold; a slowing economy because of the worldwide recession and a confused, hesitant response to the coronavirus in the United States, which Democrats are already using to attack the president.
With the possibility of a U.S. outbreak growing by the day, Trump allies and advisers have grown increasingly worried that a botched coronavirus response will hit the U.S. economy. Even Donald Trump Jr. has mused to associates he hopes the White House does not screw up the response and put the president’s best reelection message at risk, said two individuals with knowledge of his comments.
“Trump’s reelection effort is so closely tied to the strength of the stock market and the economy,” said Moore, a distinguished visiting fellow at the Heritage Foundation and 2016 Trump campaign adviser. “Anything that shakes us off of that pro-growth track is a concern, but I think the view of officials in the White House is that this will be contained.”
“Once the virus is contained, the market will bounce right back,” Moore added.
That’s true, but in the meantime, what? It’s more than the stock market, of course. Manufacturers will have trouble selling to countries hard hit by the virus. Airlines will take a hit because of all the quarantines. Tourism, financial services, and other industries will also see problems. Will Trump face the coming crisis, or will he deny that one exists.
So far so good.
The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!
— Donald J. Trump (@realDonaldTrump) February 24, 2020
The president is in an impossible position. If he downplays the seriousness of the outbreak, he can be accused of Pollyannish behavior so as not to upset the voter. If he hypes the danger, he’s doing it for political reasons. But will Democrats have a case to make that the administration is botching the response?
Funding the response had been a major sticking point between the White House and Azar, who lobbied to request additional funds from Congress before he makes four separate hearings on the Hill this week. Officials had spent days jockeying over the final figure for the emergency package, veering anywhere between $1 billion to $5 billion. The package also is expected to face resistance from Democrats, who have warned the Trump administration against shifting money away from existing commitments.
The White House and HHS both maintained that the task force is working in tandem and defended Azar’s leadership.
“There is zero disagreement between HHS, [National Security Council], the White House, and other members of the task force,” Mulvaney said in a statement. “Secretary Azar is the right person to lead this effort, and any reporting to the contrary is just false.”
I’m sure the Trump team is ready for any criticism from Democrats. This is a brand new virus that is still little understood. We know it can be spread human-to-human, but how? And can it be spread by people who show no symptoms? These questions are critical to understanding how to contain the spread of the virus.
It could be that the virus is already at the pandemic stage — out of control with no hope for containment. The WHO isn’t ready to say that quite yet. But there is no place where the virus has hit that is showing a lessening of the outbreak. It’s growing faster than authorities can quarantine people who are infected.
There’s no reason to panic. The disease is showing no signs of becoming more deadly. The mortality rate is still a little over 2 percent. But the media is whipping this thing up to be the new Black Death. So while a serious outbreak in the U.S. is probably inevitable, Trump’s main job will be to keep people calm and make sure the government germ-fighters have enough resources to get the job done.