I am sure at this point everyone is hearing about the coronavirus. I have been paying close attention to this virus for over a month now. It’s now taken on a new life because it has made it’s way to more countries, specifically Italy, and it’s killing people. What is causing the major panic right now is the fact that experts really have no idea how it made it’s way to Italy and other countries such as Iran.
How many more countries could already be affected?
What seems to be the most troubling for the experts dealing with the containment of this virus around the world is that there doesn’t seem to be a clear understanding of how the virus jumped over to Iran and Italy. The fear of the unknown is real, and especially real when dealing with a deadly virus. It should be noted that the flu here in the US is still far more dangerous to Americans than the Corona Virus, but none-the-less this virus shouldn’t be taken lightly. What is more of a concern right now in the US than the negative health aspect of the virus is the economic impact.
How does this impact the global economy?
The coronavirus’s impact has already been felt in the global economy. In the past 6 days the Dow Jones Industrial Average has dropped over 3,200 points which equates to a 11% decline. This is historically significant and it shows how seriously investors around the world are taking the coronavirus. For weeks now the global economic impact of this virus has been felt mainly because of two factors: supply chains, and the Chinese economy.
China is the world’s largest manufacturing powerhouse. Quite simply, people have been under quarantine so they can’t go to work to make the products that need to be made. This puts companies all around the globe in a tight spot when it comes to inventories. Furthermore, the Chinese economy, which many global companies rely upon to sell their goods and services, is at a standstill. Until the past few days, most of the impact has been relegated to China and the companies which do business there, but now that the virus has moved on in a big way to other countries the panic is at a whole new level. So much of a new level that the 2020 Summer Olympics hang in the balance. There is news breaking that they might have to cancel the games for the first time since World War II.
How does the coronavirus impact the US Housing Market?
On Tuesday, February 18, 2020, I took some time to elaborate on how this virus can ultimately impact the US housing market as part of our most recent Housing Market Update. Click here to view the Housing Market Update recorded video. The discussion about the coronavirus’s impact on the housing market begins at minute #12. That said, that particular discussion was from the perspective of the virus largely being contained in China. Now that it has moved on and the financial markets are in a steep decline this whole discussion has taken on a new level.
There is no doubt that the US housing market is chugging along. In that video, you will see all sorts of strong statistics proving this point. However, it is my opinion that a potential global economic crisis, started and accelerated by the coronavirus, could cause the US housing market to slip into its own downturn. If the virus takes hold in the US, we too will need to quarantine. This means events will be canceled, schools closed, offices closed, etc. Some businesses already have so many external factors stressing their financials that a 60-90 day economic standstill could be the nail in the coffin. If businesses close, jobs are lost, so on and so forth. Couple all of this with the aggressive global monetary policy of the last 12-15 years and we might just have a recipe for the next US recession.
We will prevail
God willing, the men and women at the center of preventing a coronavirus pandemic in the US will produce an effective vaccine in short order and speed up the manufacturing of coronavirus test kits which are necessary to stem the spread. I have faith in those men and women, and I also have faith in our great country to respond in times of need. That said, it’s in all of our best interests to be engaged and to pay attention to what is happening because the coronavirus is not going away anytime soon.
Geoff Green is an Entrepreneur with a focus in working by referral. Geoff is also a dedicated Father & Husband to a woman who is way out of his league! Geoff loves to play golf, watch football (American style), and generally be with his family.