AFTER a string of tragedies, some heart stopping plunges in the stock market and an emergency rate cut by the Federal Reserve, there is reason to be concerned about the ultimate economic impact of the coronavirus in the United States.

The first place to look for answers is China, where the virus spread most widely. The news, for long. stayed grim. 

IF PEOPLE stop traveling, going to the dentist, the gym, or March Madness basket ball games, the economic impact the world over will be unfathomable.

EVEN ADVANCED economies like the United States are hardly immune to these effects. To the contrary, a broad outbreak of disease in them could be even worse for their economies than in China.

That is because face-to-face service industries - the kind of businesses that go into tailspin when fearful people withdraw from one another - tend to dominate the economies in high-income countries more than they do in China.

If people stay home from school, stop traveling and go to sporting events, the gym or the dentist, the economic consequences could be worse.

In a sense, this is the economic equivalent of the virus's varied health effects. Just as the disease poses a particular threat to older patients, it could be especially dangerous for more mature economies.

This is not to minimize the indiscriminate and widespread damage the disease has caused by disrupting the global supply chain. With shortages of everything from auto parts to generic medicines and production delays in things like iPhones and Diet Coke, a great deal of pain is coming from the closed manufacturing hubs.

The proliferating damage has central banks and financial analysts talking about a global recession in the coming months.

Nor is to discount the possibility that the United States will be spared the worst effects. Scientific and public health efforts might limit the spread of the virus or quickly find a treatment or vaccine.

The warmer weather of summer might slow the spread of the coronavirus as it usually does with a seasonal flu. Many things could prevent an outbreak as large as the one in China.

But it is to say that an equivalent outbreak in the United States might easily have a worse economic impact.

As a baseline, several factors work against the United States.

China's authoritarian government can quarantine entire cities or order people off the streets in a way that would be hard to imagine in America, presumably giving China an advantage in slowing the spread of the disease.

In addition, a large share of American workers paid sick days and millions lack health care coverage, so people may be less likely to stay home or get proper medical care.

And 41 percent of China's population lives outside urban areas, more than twice the share in the united States. Diseases generally spread faster in urban areas.

Beyond those issues, however, is a fundamental difference in economic structure :

When people pull back from interacting with others because of their fear of the disease, the things they stop doing will frequently affect much bigger industries in the United States.

The honor and serving of the latest global operational research on Economics and Present Times, continues. The World Students Society thanks author, Austan Goolsbee.


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