Question

How is corona virus affecting American economy?

Answer 1

An epidemiological threat such as the new coronavirus which causes the COVID-19 disease can have destructive economic effects. It can interrupt the global supply of goods, making order filling more difficult for U.S. firms. This may also slow down jobs in impacted countries, reducing labor supply on one end and slowing demand for U.S. goods and services on the other.

The economic disruptions caused by the virus and the increased uncertainty are being reflected in lower valuations and increased volatility in the financial markets. While the exact effect of the coronavirus on the U.S. economy is unknown and unknowable, it is clear that it poses tremendous risks.

Policymakers should therefore immediately undertake a number of steps to address any economic fallout from the virus. The burden of meeting this challenge falls squarely on Congress and the Trump administration. To its credit, the Federal Reserve has aggressively cut interest rates, but monetary policy will likely have a very limited effect since interest rates are already low and have been so for some time.

Many businesses handle the time between importing new products from China and placing them in their own output with very short lead times – sometimes weeks and not months. Those companies can feel fairly quickly the impact of factory shutdowns in China. Not only conventional industries such as automotive manufacturing, but also increasingly high-tech industries such as mobile phones and computers, are impacted by these challenges. As a result of these delays in the supply chain, U.S. companies can not finish their own manufacturing and thus can not deliver their goods to the consumers. As a result, economic activity and growth are that.