Coronavirus: 5 MU30 Writer's Takes On The Economic Implications
The coronavirus is threatening to wipe trillions from the global economy, but what does this mean for you? Five Money Under 30 writers weigh in.

All but non-essential travel banned; whole countries on lock-down; shuttered stores and near-empty streets; self-isolation and a global run on masks; fear and hysteria at app德扑圈官方网址home; panic and historic drops on the stock market.

March 16, 2020 was Wall Street’s worst day since 1987, with the Dow losing almost 3000 points even after the Fed cut interest rates to almost zero.

It sounds like the well-trodden storyline of a zombie movie. But with the global spread of coronavirus, this is our new reality.

Every day brings fresh cases and more restrictions on freedom of movement as liberal democracies struggle to contain the outbreak, originating in Wuhan, China, now hitting the U.S. and Europe.

New York announced a “Containment Zone” to curb the spread of the virus.  France has banned public gatherings. Italy has quarantined the nation.

But even before coronavirus was threatening to wipe trillions from the global economy, economists were warning of a major recession.

What does this mean for you?

Five of our writers help to answer that.

We separate fact from science-fiction and explain what the spread of coronavirus means in real terms.

Everyone’s talking about it – make sure you know exactly what you’re talking about.

And to get you started, we’ve also created a video to help your money (and your mind) during COVID-19:

Is the coronavirus causing us to head towards a recession?

~Sheryl Nance-Nash

Coronavirus: Is the coronavirus causing us to head towards a recession?

Sheryl Nance-Nash is a freelance writer specializing in personal finance, business and travel. Her work has appeared in Newsday, the New York Times, Business Insider, Forbes.com, among others.

The coronavirus continues to cause chaos across the globe. The entire country of Italy is on lockdown. The first reported case in the U.S. was reported on January 20 and as of the early hours of March 12, at least 1302 people in 44 states and Washington, D.C. have tested positive for coronavirus, according to a New York Times, and at least 38 patients with the virus have died.

Corona is now being called a pandemic and the uncertainty has roiled markets. The rapid spread of the virus has financial experts changing their views on the prospects of a U.S. recession.

Investments are dropping

Greg McBride, CFA, chief financial analyst at Bankrate.com says:

“The uncertain economic impact of coronavirus continues to grip markets, with stocks, commodities and interest rates all dropping sharply. Markets have uncertainty and there is a ton of it currently in play.”

The extent of economic impact in the U.S. is what everyone is trying to gauge. No one knows for sure and that is why you’re seeing a “sell first, ask questions later” mentality in the markets, explains McBride.

In the last few weeks, the odds of a recession have grown

What’s clear is that the game has changed. Says McBride,

“The odds of a recession have increased dramatically in recent weeks. It is still far from assured, however. But cutbacks in travel, disruptions to supply chains, canceled events, and social distancing can all create a negative feedback loop of declining sales, layoffs, and reduced consumer spending.”

McBride is far from the only analyst who is now more concerned that the U.S. is moving closer to a recession this year. Moody’s economic forecaster Mark Zandi on Monday increased the odds of a downturn to about 65%, up from about 50-50 only a week ago.

“I think it is very difficult to avoid a recession,” he told CNBC Monday. “The depth of the recession will depend on how the [Trump] administration reacts.”

Young investors should NOT panic

U.S. economist Nouriel Roubini, who in 2008 was one of the first to predict that the big bust in housing prices would cause a financial crisis and a recession says the chance of a recession in 2020 is 66%.

What’s the best advice right now? Says McBride, “The guidance for long-term investors remains intact – do not panic. As the uncertainty persists, the market frenzy will continue, perhaps for weeks, perhaps for months. But long-term investors must think in terms of years or decades.”

How much should I be worrying about coronavirus and the stock market?

~Lance Cothern

Coronavirus: Coronavirus and the stock market

Lance Cothern is a personal finance expert and founder of the blog Money Manifesto. He has a Certified Public Accountant license from the Commonwealth of Virginia.

While coronavirus has been a major newsmaker in 2020, it is important to remember no single event causes all of the moves in the stock market. Even so, coronavirus has impacted the stock markets in a significant way. 

The Dow Jones had its worst days in history

What may surprise you is when the virus started impacting the US markets. As of March 11th, the Dow Jones Industrial Average (DJIA) closed at 23,553 which was down 5998 points from its all-time high. And then just five days later on March 16, 2020, the Dow lost almost 3000 points, Wall Street’s worst day since 1987.

The first coronavirus death was reported on January 11th, 2020. On January 13th, the next trading day, the DJIA closed at 28,907. Over the next month, the DJIA didn’t have any huge swings based on coronavirus news. China locked down Wuhan, the epicenter of the outbreak, on January 23rd and the DJIA did drop a couple of hundred points the next day. 

The next major event was the Diamond Princess cruise ship was quarantined on February 5th, 2020 and just a few days later the DJIA closed at an all-time closing high of 29,551 on February 12th, only one day after coronavirus was officially named COVID-19.

The DJIA had its first large drop on February 24th, falling just over 1,000 points from the previous trading day’s close. On February 26th, the first suspected case of local transmission occurred in the US. Over this week, the DJIA would continue to spiral down to its recent closing low of 25,409 on February 28th which was 14% below its high. 

Over the next week, the DJIA had huge daily swings up and down. Some of these reached over 1,000 points in a single day. On February 29th, the first coronavirus death was reported in the United States. 

On March 3rd, the Federal Reserve cut interest rates half a percent and then cut interest rates to almost zero in mid March. This was the largest cut in the last decade. At the end of the week on March 6th, the DJIA ended up slightly higher on the week at 25,865.

Oil prices have dropped

Over the following weekend, OPEC’s oil supply cut in response to the coronavirus demand drop failed and Saudi Arabia slashed prices on oil causing oil prices to drop over 20%.

This sparked even more fear in the markets. On March 9th, the market circuit breakers activated after the S&P 500 fell 7% in the opening minutes of trading. This paused markets for 15 minutes before trading resumed. After trading resumed, the DJIA suffered losses of as high as 2,100 points, which was a little over 8%, at the time of this writing at 2:20 PM EDT.

There’s no telling what will come in the future

The future impacts of coronavirus on the stock market are unknown. Fear of supply interruptions and a drop in demand are predicted to result in lower earnings for many US companies. The markets could continue to drop dramatically.

Alternatively, investors may determine the impacts are priced into the market already and start boosting the markets again.

Only time will tell.

How are consumers being affected by the coronavirus?

~ Stephanie Faris

Coronavirus: How are consumers being affected by the coronavirus?

Stephanie Faris has written about finance for entrepreneurs and marketing firms since 2013. Her work has appeared on Retirable, The Motley Fool, and GoBankingRates.

Consumers with travel plans have already begun to see the effects of the coronavirus on the general population.  The U.S. State Department has cautioned against cruise ship travel, particularly for consumers who have health issues. But even if you’re sticking close to app德扑圈官方网址home, you could still find your day-to-day life changes dramatically in the coming weeks.

People have begun hoarding staple items

One of the first signs of consumer concern has been hoarding, as people rush out to buy items like toilet paper after seeing reports of empty shelves in other countries.

A few news outlets have even mentioned an eventual quarantine, advising a grocery stockpile of up to two weeks. But grocery delivery companies have already begun to offer contactless delivery to let you get food without putting yourself or the delivery person at risk.

Employers and schools have started taking action

Whether there’s a mandatory quarantine or not, though, the coronavirus has left U.S. employers in a tough situation. If you can work from app德扑圈官方网址home, it’s easy enough to make the switch to a mostly remote workplace for the time being.

But in the many cases where workers must be on-site, employers are grappling with reducing the risk of an outbreak without frightening workers.

For parents of school-age children, sending kids to school every day is especially challenging. Currently, there are no plans to close schools, but that could change, which would put parents in a tough position. If you still have to report to work every day, you’ll then have to worry about finding childcare.

No nationwide quarantine…yet

Currently, there’s no nationwide mandatory quarantine, but officials are urging consumers to take precautions. As the disease continues to spread, consumers may begin to alter their weekly activities, perhaps staying app德扑圈官方网址home instead of going to the movies or dining out.

At the very least, people may begin to put off plans to book a summer vacation or fly across the country to see relatives.

If you are supposed to travel abroad, what do you need to consider before you fly? 

~ Kevin Mercadante

Coronavirus: The best credit cards with travel insurance and medical coverage

OutOfYourRut.com. A recent transplant to New England, he has backgrounds in both accounting and the mortgage industry.

Though the coronavirus shouldn’t cause you to panic and dramatically alter your plans, it does require advance preparations. If you’re going to travel, especially overseas, having certain travel benefits – like travel insurance and medical coverage – is a non-negotiable strategy at this point in time.

And everyone and their best friend are reconsidering their travel plans with corona – both in terms of how not to get sick, but also what to do if you need to travel in the coming months after you buy a ticket.

The issue is that travel insurance is designed to cover you if there an unforeseen event and COVID-19 is no longer considered an unforeseen event.

This means that travel insurance won’t protect you any more than booking on a credit card. If you choose to ahead with your booking, travel insurance will help you with high medical costs in the event of an illness, but you need to check in advance since your policy may be void if you head to a region where corona is prevalent.

If you purchase insurance with a “cancel for any reason” policy, you can have up to 75% of your expenses reimbursed. These policies also tend to be considerably more expensive than regular insurance (up to 40%), but leave you free to change your mind—if you don’t mind covering some of the costs.

The good news is that most airlines are offering generous cancellation and refund options.

But what if you want to book your travel today for this coming May? You’re likely to wonder what’s the best credit card option for this exact scenario.

Chase Sapphire Reserve® card

The Chase Sapphire Reserve® card is a premium card with a steep annual fee at $550. But it comes with Trip Cancellation/Interruption Insurance that can reimburse you up to $10,000 per person and $20,000 per trip for prepaid non-refundable travel expenses, including passenger fares, tours, and hotels. The coverage applies to trips canceled or cut short by illness, severe weather, or other covered situations.

Chase Sapphire Reserve® card also comes with Emergency Evacuation & Transportation coverage. If you or an immediate family member are injured or become sick during a trip far from app德扑圈官方网址home that could result in an emergency evacuation, you can be covered for medical services and transportation for up to $100,000.

However, take note, if you’re hoping to cancel ahead of time: Chase explicitly states that they do not cover interrupted or canceled trips due to “your disinclination to travel due to an epidemic or pandemic.”

What about medical coverage?

The next question that we all seem to be talking about in our smaller circles is the cost of medical coverage if we end up coming down with the coronavirus. Millennials may have heard that Medicare Part B is covering the COVID-19 test, but since we’re years away from Medicare, where does that leave us?

It’s so clear to me that coupled with the fact that we’re worried about getting corona, we’re equally as worried how we’re gonna pay for this kind of surprise medical bill.

American Express Platinum® Card

The American Express Platinum® Card may have the best medical benefits available of any credit card. It offers Platinum Travel Assistance at no additional charge. It provides emergency medical transportation of up to $100,000, emergency medical services up to $20,000, and emergency dental treatment up to $1,000.

It also provides prescription expenses up to $1,000 as well as hospitalization arrangements, medical monitoring, and coordination arrangements for surgery when necessary.

Platinum Card from American Express also charges a $550 annual fee, but the card offers some of the best overall travel benefits available with any credit card. 

Have there been any positive economic effects due to coronavirus?

~Sarah Sharkey

Coronavirus: Positive economic effects

Adventurous Adulting.

It is no secret that the coronavirus has the potential to wreak havoc on the worldwide economy. With a sharp drop in the U.S. market on March 9th, this may only represent the beginning of the economic fallout of the coronavirus. 

As the virus begins to make waves for U.S. travelers, the travel industry has taken a nosedive. For example, Norwegian Cruise Line Holdings saw a 26% drop in a single day. This comes after the U.S. State Department recommended that people at-risk for catching the widespread virus avoid cruising for the near future

Cheap flights and super low loan rates

If you’ve got the travel bug, this is a great time to book a cheap flight!

Indeed, airlines are slashing their fares left and right. So if you’re so inclined to take that domestic trip, you can get a bargain price and save tons right now. It just depends on how worried you are about corona.

And mortgage rates have dropped to an all-time low with corona, making this a golden opportunity to buy a app德扑圈官方网址home or refinance your mortgage.

Clorox saw a 1% rise in their stock price

However, not all companies are suffering from the onset of the coronavirus. In fact, some companies are enjoying a rise in stock prices. For example, the Clorox Company saw a 1% rise in its stock prices on March 9th.

Among other products, Clorox produces bleach which could be increasingly useful as the coronavirus begins to take hold around the world. 

GOJO – makers of Purell, are also seeing more demand

Another company that is doing well despite dismal economic markets is GOJO Industries. GOJO is responsible for producing Purell, which consumers are seeking out to help protect themselves against the virus. The Ohio based company is increasing its production of Purell in the hopes of preventing a shortage. 

A GOJO Industries spokesperson has stated that the company has no intention of price gouging their customers during this difficult time. The hope is that the company can keep up with the uptick in demand as the virus affects more people around the world.

However, no one is quite sure whether or not Purell will be effective against COVID-19. 

Summary

“Don’t Panic” is the mantra of cult science-fiction series, “The Hitchhiker’s Guide to the Galaxy.”

And while you may wonder if we’re currently living through a particularly dark episode of Black Mirror, it’s important to remember that with careful planning – whether that’s a credit card with top-rate travel insurance or stockpiling staple items (Oreos don’t count) – and a sense of perspective, you’re likely to be just fine.

And if in doubt, you might not have a mask, but don’t forget your towel. 

Read more:

Related Tools

About the

Rebecca Greig picture
Total Articles: 5
Rebecca Greig is the managing editor of a number of personal finance and investing titles including Money Under 30, Dough Roller and Consumerism Commentary. Following a degree in politics from Cambridge University and a Masters in journalism, she has worked across TV and print, including the BBC, Al Jazeera English, Newsweek and reported from Mongolia, Nepal, Israel and the Palestinian Territories. Follow Rebecca on Twitter.

Article comments

We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their s; they do not represent the views or opinions of Money Under 30. Comments have not been reviewed or approved by any advertiser, nor are they reviewed, approved, or endorsed by our partners. It is not our partner’s responsibility to ensure all posts or questions are answered.

Cancel reply