A recurring joke among people dissatisfied with the choices
in recent elections has been the “Sweet Meteor of Death.” The dark humor has become
uncomfortably close to reality as the Coronavirus outbreak becomes a wild card
in the 2020 elections.
Although the virus is still being studied, the
Centers
for Disease Control notes that the Coronavirus, officially dubbed “COVID-19”
(Corona Virus Disease -2019),
is a
disease that is easily transmitted through person-to-person contact. The virus
is primarily spread through “respiratory droplets” disseminated by coughing and
sneezing. A secondary form of transmission may be through touching objects where
these droplets have landed and then touching your mouth, nose, or eyes.
Symptoms of COVID-19 can include fever, coughing, and
shortness of breath. Symptoms are believed to appear in as little as two days
after exposure but can take as long as 14 days to manifest. However, a recent statement
by a Chinese provincial official suggests that the incubation period for the
virus could be as long as
27
days.
The mortality rate for the disease is estimated to be about
2-3 percent. By way of comparison, the death rate for this year’s flu virus is
about
0.1
percent. The mortality rate for SARS was
10
percent, MERS was
34
percent, and Ebola was
90 percent.
About two-thirds of the Coronavirus deaths are male and more
than 80 percent were over 60-years-old. In about 75 percent of the fatal cases,
there was another underlying illness such as cardiovascular disease. The median
time between the first symptom to death was
14
days with a range of 6 to 41 days. Most fatalities have been in Wuhan where
there were not enough resources to care for the influx of patients.
At this point, the Coronavirus cases are concentrated in
China. While the virus has appeared in numerous countries, including the US,
most cases outside China are in isolation and are measured, at most, in the
hundreds.
At
last count, Japan has 691 cases and South Korea has 602. The number of
cases in Italy has surpassed 100 while Iran has reported 43 cases. There are
35
confirmed cases in the US. China has more than
77,000 cases.
The epidemic is growing at this point and represents a wild
card for upcoming elections. While COVID-19 is not as lethal as some previous
viruses, it spreads rapidly and could conceivably sweep the world in a
pandemic.
During the Great Depression, it was said that “when America sneezes,
the world catches cold.” In the 21
st century, it may be China that
gives the world economy a cold. China is one of the world’s largest economies and
many global corporations have international supply lines that run through the
country. Those supply lines may be interrupted by the disease and travel
moratoriums. Already, many airlines have
suspended
flights to and from China and shipping companies such as Maersk are
warning
that decreased demand will impact their bottom lines.
Obviously, the more the virus spreads, the larger the impact
will be. Mohamed El-Erian, chief economic adviser to financial services company
Allianz, told
CNN,
“They first paralyze the region of the virus outbreak. Then they gradually
spread domestically, undermining internal trade, consumption, production and
the movement of people. If the virus is still not contained, the process
spreads further, including regionally and internationally by disrupting trade,
supply chains, and travel.”
The flip side is that the outbreak may help some sectors of
the market. Mark Zandi, chief economist for Moody’s Analytics, told
MarketWatch
that the epidemic could help suppress interest rates in a way that helps the
housing market.
“The coronavirus is sort of a dark irony helping out
housing,” Zandi said. “It’s keeping rates down as global investors come piling
into the U.S. but it’s not hurting our economy to the point where it’s costing
us jobs.”
Other industries that could see a boost from the crisis
include medical suppliers and pharmaceutical companies. There is currently no
antiviral treatment or vaccine for COVID-19, but in severe cases, patients are
treated to support vital organ functions.
There are currently too many unknowns to say how the outbreak
will affect either the economy or the election. China’s manufacturing losses
may represent gains for other countries, including the US where
manufacturing
was in a mild recession throughout 2019. On the other hand, if trade is
suspended between more countries, manufacturing demand may fall further. If the
number of new cases slows, then Chinese factories may reopen and trade resume
after a relatively short interruption.
At this point, the impact seems likely to grow, however. Stock
markets today gave a hint of what may be to come with an
800-point
drop in the Dow that may just be a tip of the iceberg. Given the fact that the
US has had a bull market for the past 11 years when the business cycle is
normally five to six years, we are long overdue for a correction. The
Coronavirus may do what the trade war failed to do and tip both the world and
American economies into a recession.
“The second-largest economy in the world is completely shut
down. People aren’t totally pricing that in,”
said
market analyst Larry Benedict, who predicts a 10 to 15 percent market
correction. “It seems like there’s much more to come.”
Politically, the effect is also unknown. Fears of the epidemic
spreading to the US could build support for Trump’s brand of quasi-isolationism.
Ironically, the outbreak began in China, the foil for President Trump’s economic
populism. Trump supporters will argue that the crisis calls for a more
self-contained economy and less dependence on international trade.
Conversely, concerns about public health could make health
care a more prominent issue in the election. If Coronavirus concerns make health
care reform a bigger issue, it would likely be to the opposition’s advantage
since
voters
typically trust Democrats more on health issues. Republicans have been
largely silent on health care reform since the abortive attempt to repeal or
replace Obamacare in 2017.
If the epidemic sparks a recession, then the one unequivocal
bright spot of Trump’s presidency will be gone. Among many voters, the strong
economy is the only thing propping up their support of the president. As the
Great Recession swept Barack Obama into power, a Coronavirus recession could elevate
Bernie Sanders (or whoever the eventual Democratic nominee is) to the White House.
Another factor is how Coronavirus in the US could affect
voter turnout. If current trends continue, a virus outbreak in the US would potentially
affect the elderly disproportionately.
Older
voters also disproportionately support Donald Trump. If there is an
epidemic that depresses turnout, it is possible that the Trump campaign will
bear the brunt of the outbreak politically.
Yet another possibility is that a strong, competent reaction
from the Trump Administration will provoke a rally-around-the-flag response
from voters. In the past, unpopular presidents have redeemed themselves by rising
to the occasion in a crisis.
The best way to ensure that the Coronavirus has a minimal
effect on the election and the world in general is to take precautions to
protect yourself and your family. The
CDC
recommends basic precautions such as covering your mouth and nose with a tissue
when you cough or sneeze and then throwing the tissue away. Don’t touch your
eyes, nose, or mouth and wash your hands frequently, especially after coughing,
sneezing, or trips to the bathroom. Use soap and water and scrub for at least
20 seconds. Disinfect household surfaces with cleaners or wipes. Stay home when
you are sick.
At this point, the CDC does not recommend face masks or
respirators for people who are not sick with the virus. However, it is good
practice to stay about six feet away from people who are coughing or sneezing
to help prevent transmission of airborne particles. If you feel the need to
invest in masks or respirators, however, there are many reasonably priced N95
respirators available online.
As an Eagle Scout and a survivor of floods, tornados, and a
hurricane, I’ll add that being prepared for a disaster is always a good idea.
Be ready for the worst-case scenario by maintaining a supply of food and water to
last a couple of weeks. Power supplies for flashlights, radios, and cell phones
are also good to stockpile in your emergency closet. So is a gun and
ammunition.
Right now, there are more questions than answers about the
Coronavirus outbreak. The good news is that the virus is not as lethal as other
diseases while the bad news is that containment could still strain the economy.
It will likely be months before the full extent of the epidemic is known, but it
would be prudent to follow the old maxim which advises us to hope for the best
while we prepare for the worst.
Originally
published on The
Resurgent
