If the virus spreads in the United States, the Federal Reserve might have to cut rates. But how fiscal policymakers respond is likely to be even more important.
WASHINGTON — The global spread of the deadly coronavirus is posing a significant economic test for President Trump, whose three-year stretch of robust growth could be shaken by supply chain delays, a tourism slowdown and ruptures in other critical sectors of the American economy.
The outbreak of the virus in China has already disrupted global trade, sending American companies and retailers that rely on Chinese imports scrambling to repair a temporary break in their supply chains. Its spread to South Korea, Italy and beyond has hindered global travel. Economic forecasters say that the effects will hurt growth in the United States this year even if they do not intensify — and that if the virus becomes a global pandemic, it could knock the world economy into recession.
Stock markets have plunged this week on fears about the virus, with companies such as Apple and Microsoft among the most prominent businesses that have warned that supply chain disruptions could slow sales. Analysts said this week’s declines were on track to be the steepest since the 2008 financial crisis. Continue reading.