How the virus can harm the economy

Primary ways the virus can harm commerce and economies

Local - Prevention tactics such as stopping travel or locking down areas affect local economy (people can’t work, people can’t shop, products become unavailable, prices inflate as goods become scarce).  Local’s stop going out where others are.  Locals stop spending money.
Global - Factory closings affect deliveries of parts and finished goods elsewhere in the World (auto parts are shutting down auto production plants in Europe and North America, Apple phone inventories low, running out of some models).  Chinese and others not travelling means lost hospitality, transportation and luxury good sales.  Local tactics affect others elsewhere. 
Local - Factory closings and reductions and people just not being able to get to work mean lost wages, which translate into lost consumer sales (1/3 of Apple sales are in China).   Less business means loss of wage income. 

We are seeing some evidence of supply disruptions from China affecting transportation companies, product suppliers and manufacturers here in the States.  One could guess that this will get worked out over a couple of months after the need for controls is deemed unnecessary.   Thus, hopefully by April or May or June.  However, the CEO of a research firm that tracks over 3,000 intermediary products says that the interrelatedness of Taiwan, China, Korea and Japan, just to name four, is such that getting the kinks out may take more than six months. 

What we aren’t seeing yet is the impact on a population  4x that of the US that is now living without pay (even though they may get some of it as back-pay) on the future demand for goods and services.  This as pork and chicken prices have risen significantly and people are having to forgo anything but food and housing.   One would wish that this will all be resolved in several months as well, but will probably leave residual purchase demand lower. 

Another possible impact.  The very strong-handed policies of the Chinese government to control people in a blunt way could lead to anti-government behavior including protests, etc. leading to unstable environment affecting work and demand.   Hong Kong is an example of concerns not being resolved. 

And, the whole situation will probably accelerate any trends to locate or relocate sourcing suppliers outside of China, affecting work and internal demand there.

God bless,

Ed and Claudia