The economy has been doing very well lately and I would prefer to be talking about this. But, of course, we now have a more immediate problem to deal with.
The atmosphere in the U.S. about the coronavirus threat is almost panicky but consider:
- There are currently 3115 confirmed cases of the virus in the U.S. and 60 deaths.
- There have been 81,000 cases in China (with four times our population) so far and 3199 deaths.
- China now reports that there are fewer and fewer new cases reported every day.
- Since China, with a late start, has been able to get the virus under control in a ten week period, the U.S. with a sensible strategy, should be able to do the same.
- Just in the last few days a very sensible strategy has sprung up spontaneously around the country: social distancing. Isolate yourself from other people to minimize your infection risk.
- Also, the federal government has declared a national emergency and has set up a flu testing strategy with major businesses such as Walmart, CVS and Walgreens.
- Our economy is being hurt by the coronavirus outbreak, especially for transportation and entertainment. Cruise ships, airplanes and restaurants will all be badly affected. In Omaha NE, where I live, both the College World Series (each June) and the Berkshire Hathaway annual convention (each May) have been cancelled for 2020. Omaha will thus take a big financial hit.
- Performance theaters and art galleries in Omaha are suspending operations but not yet movie theaters and restaurants. This will also hurt the economy.
- Economists are mixed on whether or not the U.S. is likely to go into recession which requires two successive quarters of negative growth. We won’t know officially until October of this year, after the third quarter ends.
- In the meantime, watch the monthly unemployment rate which activates the Sahm Signal indicator of recession. I will be watching this carefully and reporting on it.
Summary. The coronavirus is very serious. The federal government is now responding forcefully even if it did delay initially. Practice social distancing but without overreacting. My wife and I (both retired) will continue most of our normal daily and weekly activities such as working out, meeting with others in small groups, going to movies and eating out at our favorite restaurants.