Coronavirus: Gauging impact on US economy
The economic impact of a coronavirus outbreak in China that has left 17 people dead and more than 500 ill may be less virulent than markets fear.
Concern that the virus, which originated in Wuhan, China, would spread farther and chip away at global growth have roiled stocks worldwide. While the World Health Organization considers whether to declare a global emergency, all three of the major U.S. indexes have come under pressure after heavy selling engulfed markets in Asia and Europe.
Longer term, however, “we don't expect it to cause the sort of panic that hit travel and retail sales in affected areas during the SARS epidemic in 2003, principally because the mortality rate for this new virus appears to be much lower,” wrote Paul Ashworth, chief U.S. economist at the London-based research firm Capital Economics.
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The Wuhan coronavirus' mortality rate of less than 3 percent compares with almost 15 percent for SARS (Severe Acute Respiratory Syndrome) in 2003 and 6 percent to 6.9 percent for the flu and pneumonia, according to the Centers for Disease Control and Prevention.
While the U.S. largely escaped the 2003 SARS epidemic, Canada had 400 confirmed causes that resulted in 44 deaths. The country's economy shrank 0.6 percent amid the panic in the first quarter of 2003, compared with growth of 2.2 percent in the three months before.
Only one case of the Wuhan virus has been confirmed in the U.S. so far.
“The upshot is that even if this first isolated case of the Wuhan virus in the U.S. develops into a full-scale epidemic, which is unlikely, we wouldn't expect it to have a significant negative impact on economic activity,” Ashworth said.
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One area that is affected is the pharmaceutical industry. Biotechnology companies like Novavax, Nanoviricides and Co-Diagnostics, which provide flu treatments, have rallied sharply over the past few days.
Meanwhile, travel-related companies, including Hyatt and Intercontinental Hotels Group have seen their shares come under pressure as the virus curbs travel inside China and beyond.
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