Is Market Concern Justified for Coronavirus?

The President appears to remain less concerned with American health than the economy, but the two are very much inter-related. Containing and mitigating the spread of the coronavirus should be the President’s nearly exclusive priority, because the American economy will be substantially more affected by an outbreak, than China for example. I say that because the average Chinese citizen takes half a flight a year and the average American takes three flights a year. The Diamond Princess fiasco is deterring Americans from cruising, which will have a direct affect on the economy. 11.5 million Americans cruise every year, compared to about 2.3 million Chinese citizens. Americans spend more than $19 billion a year on gym memberships, the Chinese about $6 billion and these are mostly “discretionary” services.

If the virus isn’t contained, who’s going to go to the doctor, dentist, or hospital, if it isn’t absolutely necessary? Health spending represents seventeen percent of the U.S. economy, which is more than triple the Chinese portion. Considering the overwhelming economic concern regarding “supply shock,” American’s should potentially be far more concerned about the effect of cutbacks resulting in “demand shock.” Of course not every category of demand is as askew, for example, both countries have similar portions of gross domestic product in food service and retail. Agriculture, on the other hand, is responsible for ten times America’s GDP portion, but it’s a sector less noted for social interaction, so therefore it is less affected by increased degrees of social withdrawal.

The best way to think of a coronavirus epidemic is along the lines of a coast-to-coast snowstorm that causes people to hole-up, reduces or eliminates economic activity and social interaction, and literally shuts the country down for months, until the snow, or virus in this case, can melt away in the increasing summer temperatures and simply dissipate. It’s an uncomfortable possibility, particularly since a large share of American workers lack paid sick days and healthcare coverage, so are less likely to stay home or get proper medical care. However, hope still remains that health officials will be able to limit the spread of the virus, or quickly develop an effective treatment or vaccine.

Regardless, the global recession had started before the coronavirus became an issue and the fact that it has become an issue most certainly adds to the global slowing trend. It may take some time to be felt, but the economic days of reckoning are coming, which suggests that it’s a good time to plan for it. Gold and other precious metals have a long history of providing safe-haven asset protection. Don’t become an economic victim of the coronavirus. Contact the experts at American Bullion, now. Call (800) 653-GOLD (4653).