Coronavirus Poses Threat to U.S. Economy

A survey of economists by The Wall Street Journal shows that the coronavirus will likely reduce U.S. economic growth in the first quarter. “In a survey of economists, 83% expected the coronavirus outbreak will have a small impact on U.S. gross domestic product growth from January to March, or less than 0.5 percentage point,” reported Fox Business. 5% expected a bigger reduction and 10% say no impact.

China says it will take steps to alleviate its economy by controlling the virus and offering measures such as tax relief domestically. According to Fed chair Jerome Powell, the Fed is monitoring developments stemming from the coronavirus, which he said “Could lead to disruptions in China that spill over to the rest of the global economy.”

Powell added that it was too early to assess the threat the virus poses to the U.S. economy, however, he believes that the U.S. economy “is in a very good place” with strong job creation and moderate growth.

Nonetheless, an article by Market Watch reports that the coronavirus outbreak could affect the U.S.-China trade deal – specifically the recently signed “phase one” trade agreement between the U.S. and China. According to White House national security adviser Robert O'Brien, the outbreak could cause China to buy fewer U.S. agricultural products this year.

“We expect the Phase 1 deal will allow China to import more food and open those markets to American farmers, but certainly as we watch this coronavirus outbreak unfold in China it could have an impact on how big, at least in this current year, the purchases are,” he said at an Atlantic Council event.

Apart from disrupting the U.S. economy, the outbreak could also disrupt the global supply chain. “There's no doubt that the virus could have an impact on the U.S. economy and also on the world economy,” O'Brien said.