Regardless of what Trump does to fight coronavirus, a downturn is more than likely coming. Now that Wall Street is paying attention, analysts see the impact of the coronavirus’ spread hitting hard in the second quarter, which starts in April. Things should start to look better in the fourth quarter, which begins in October.
But there is reason to consider that a recession caused by the coronavirus may be stickier than analysts imagine — that this could be a U-shaped recovery, one that takes time before the economy bounces back, not a V-shaped recovery, which would entail a sharp drop and equally sharp recovery.
Coronavirus is both a supply (not enough goods being produced or delivered) and a demand (not enough people who want to buy them) shock. This is already evident in China’s economic data where last month both manufacturing and service sectors of the economy were walloped with a force unseen since the financial crisis.
Global policymakers aren’t used to this particular kind of problem.