Why is the President lying? Take a guess. Because he thinks the virus, and fear of contagion, is bad for him. On that count, he’s absolutely correct. Unfortunately, claiming that the virus is not a big problem does nothing to ease the infection rate or the economic impact that is sure to span the globe before long.
But the virus could have a dramatic impact on the future of the United States even if not one more American becomes infected. And Trump knows this.
This virus, a public health emergency and a human tragedy, is also a sudden and powerful factor affecting the global economy. As a result, it could end up playing a key role in determining the outcome of the 2020 election in the United States.
An economic shock from a large-scale epidemic or a pandemic could affect any presidency, but that is particularly true of this one for two principal reasons: First, the President’s main argument for reelection is that he has done a great job on the economy. He falsely claims this is the greatest economy in US history, even though it created more jobs under President Barack Obama and grew faster many other times.
Second, Trump was elected by the thinnest of margins. He lost the popular vote and could have lost the presidency if fewer than 80,000 votes in three states had gone to his political rival.
If the 2020 election is close once again, an erosion in America’s economic performance could sway enough people to deny him reelection.
Obviously, that is not the only factor. The Democrats’ choice of candidate may be a much more important consideration for voters.
Still, the inescapable impact of the coronavirus on the US economy could prove pivotal.
There is no chance the virus will leave America’s economy unscathed. The virus is spreading, reaching dozens of countries, with big new outbreaks in South Korea, Italy and Iran.
But even if all the cases were limited to China, the rest of the globe would feel it. That’s because China has become a global economic powerhouse: The loom in the tapestry of interconnected threads that is global commerce. Those who thought the impact of COVID-19 would resemble that of another epidemic, SARS in 2003, missed the contrast.
SARS infected 8,098 people and killed 774, a fraction of the new virus. COVID-19 is more contagious, but SARS killed more of the people it infected.
And China’s economy now accounts for 16% of the globe’s, quadruple what it was in the days of SARS.
As the virus makes its way into dozens of countries, the economic shockwaves will still flow most potently from what is happening in China. China has been the engine of growth for years, accounting for about one-third of all the growth in the world.
China is a voracious consumer of exports from around the world, and in recent years, it has also become an important consumer of finished goods.
With segments of China shut down to prevent contagion, its economy, which was already growing at the slowest rate in decades, could see growth cut in half. That means less manufacturing and less purchasing of raw materials. China has been buying most of the world’s cement, coal, steel, nickel, copper and countless other commodities.
A slowdown there will be a gut-punch to exporters in multiple countries.
China sells and buys massively from every US state, from airplanes to cars, to grains. Chinese consumers buy cars, luxury goods and travel extensively. Or at least they did before the epidemic.
But it may be China’s pivotal role in the supply chain of global production that has the greatest effect. China makes pieces of just about everything we buy, from electronics to medications. Apple warned it won’t meet its sales goals. The Food and Drug administration is reportedly concerned about possible shortages of some 150 prescription drugs.
Airlines around the world are taking a hit. And the cruise industry is facing huge losses, according to Yahoo Finance.
Even the movie industry, which has become increasingly reliant on audiences in the world’s most populous nation, will feel the pummeling from the closure of 70,000 theaters in China.
We know China’s economy will experience a sharp slowdown. Japan, Singapore and South Korea are next in line. European countries could get tipped into recession. Germany, France and Italy were already struggling before the outbreak. In fact, the world was just starting to regain its footing from Trump’s trade wars when the virus struck.
A global slowdown will inevitably strike the United States. That’s the realization that produced an anxiety attack on Wall Street on Monday and Tuesday, the biggest drop in years.
It’s why Trump had reportedly feared taking measures that signal panic.
Democrats in Congress are fuming. According to House Speaker Nancy Pelosi, the President’s $2.5 billion funding request to fight the virus is “long overdue and completely inadequate.” She vowed that the House provide more than Trump requested, and “advance a strong, strategic funding package,” commensurate with the challenge.
The best advice for Americans now is to wash your hands often and listen to the experts — not to the President. He’s not telling the truth. He’s gaslighting, muddling and contradicting the urgent public health advice from experts.
Trump’s commerce secretary, Wilbur Ross, claimed the virus would help American workers. “I don’t want to talk about a victory lap,” he said, but it could bring jobs to America.
But the virus will hurt America. Private economists are already slashing economic projections.
It’s impossible to know the magnitude of the hit. But it’s not out of the question that coronavirus could become Trump’s “black swan,” the low-probability, high-impact event that changes everything, even his prospects for reelection.