Mar 16, 2020 - 9:15am

Quick Take: Coronavirus' Economic Impact

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The coronavirus (COVID-19) was first identified in Wuhan, China and reported by the World Health Organization on December 31. It has now spread to countries across the globe

The United States has also been impacted with cases reported in every state and the District of Columbia. For the latest, visit the Centers for Disease Control and Prevention’s (CDC) website.

Our take:

In the U.S., it’s important that individuals stay informed and prepared. Americans should follow the advice from the CDC, relevant state and local authorities, and health care professionals.

Public health is a shared responsibility. Communities, businesses, and individuals can and should take measures to reduce the spread of the coronavirus. The CDC has advice on how familiesschools, and businesses can plan for and respond to the virus. In terms of travel, the U.S. State Department issued travel restrictions related to the coronavirus advising U.S. citizens to avoid all international travel.     

For the business community specifically, the CDC has issued a guide for employers to respond to the virus. Recommendations include: actively encouraging sick employees to stay home, flexible policies that permit employees to stay home to care for a sick family member, and respiratory etiquette and hand hygiene.

The U.S. Chamber supports these CDC recommendations and urges state and local chambers, its members, and the wider business community to adopt and implement these standards, if they have not done so already. Based on information provided by the CDC, the U.S. Chamber of Commerce Foundation created two guides to help employers and employees prepare for and address the impacts of the Coronavirus.

What’s the near-term and long-term economic impact?

The spread of the coronavirus is having significant implications for businesses around the globe.

We are in uncharted territory when it comes to the economy. We have never shutdown the U.S. economy to the extent it is shuttered now. The uniqueness of the current situation makes economic forecasting little better than fancy guesswork, but that has not stopped some from trying.

Some estimates of the economic shutdown see U.S. GDP dropping by as much as 40% in the second quarter. The average of estimates we are tracking is -12.4% for the second quarter. That -40% estimate is an outlier for now, but there is little doubt we are in the early stages of a severe contraction in economic activity.

The good news is that the economy will bounce back rapidly once people return to work and consumers start spending again. The sooner that happens the sooner we will recover as much of the growth we lost as possible.

If the outbreak is fully contained and the economy opened up during the second quarter, the third and fourth quarter growth figures should be as eye-catchingly large as the second quarter will be concerning.

Recent actions by the Federal Reserve, Congress, and the administration should help maximize the speed and size of the recovery.

What policy recommendations are we making?

The coronavirus is causing disruptions for businesses of all sizes and in all sectors. It may be a temporary and transitory disruption, but there is a very real risk that families will lose income and businesses of all sizes will suffer as a result.

As the economic impact of the virus grows, we are pushing our government leaders here in Washington to quickly take several common sense steps to provide assistance and relief to businesses and workers alike. Our recommendations include:

  • Pausing the payment of payroll taxes, which will grant businesses relief so they have more cash to keep employees on their payrolls. 
  • Lending through the U.S. Small Business Administration and grants for small businesses that will enable this sector to endure through the crisis.  
  • Establishing a bridge loan facility that will enable businesses to continue to pay employees and provide essential operations for a time on far less, or no revenue. 

These are meaningful policy steps that will help mitigate the economic impact of the virus, keep local businesses afloat, and help families make ends meet. Whatever the ultimate impact of the virus will be, it’s important that the economy returns to strength quickly.

Follow expert advice:

First and most importantly, it is vital to keep up to date with the latest developments on the virus from the CDC and your state and local health departments. It is also important to follow any directives from relevant state and local authorities on precautions and protocols to take in your area.

What’s next:

This is an emerging, rapidly evolving situation. In terms of your health and the health of your employees, the CDC recommends: 

Additional Resources

Click here for more information.

Updated: 4/3/20.

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