The Economic Impacts of the Coronavirus

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News about what the coronavirus is doing to the economy is everywhere. In this video we talk about what exactly is happening.

Now that the Coronavirus has infected over 90,000 people and killed over 3,000 people, it’s likely that nearly everyone knows what it is. It has been spreading to many throughout the world, but not much is known about it, causing people to be concerned about it.

These concerns led to the stock market taking a tumble. On Monday, February 24, the Dow Jones Industrial Average dropped a thousand points, which is 3.5% of its overall worth. I knew this wasn’t a good thing that was happening. The next day, on Tuesday, the Dow dropped a thousand points again. On Wednesday, it didn’t drop as much as it previously had, only dropping around a hundred points. On Thursday, the Dow dropped 1,100 points and on Friday, it dropped over 600 points.

When the Dow changes price, it indicates what the rest of the market is doing. So if the Dow goes up, the rest of the market goes up. If the Dow goes down, the rest of the market will go down. This happened on Monday. Amazon and Google both dropped over 4% and Tesla dropped nearly 7.5%.

Large companies are worried about how the Coronavirus will affect their business, in ways like shortages of products and lost profits. Companies will sell less over the next few months as consumer confidence is low. Companies that sell a large amount to China will also be at a loss due to Chinese customers not buying. Any economic problems that do happen, will likely only happen in China.

The SARS outbreak of 2002 and 2003 is often compared to the Coronavirus. SARS cost the world $40 billion, but Dow Jones increased during that time. Ebola was another major outbreak. Similar to SARS, Ebola did not affect the Dow. Poverty increased and incomes dropped in the countries affected. Some countries gave money to help control the outbreak, but the world economy wasn’t really affected.

Real estate is an investment option that is important to me. The real estate market is bad in China, like all other markets. Unless the stock market keeps going down, the U.S. real estate market should be fine. The high end real estate market would especially go down because the rich are not making money from their investments, so they cannot buy houses. Also, with Chinese buyers not buying houses, that could pose a problem. The real estate market should be fine, especially if interest rates drop.

If you are invested in something, you should not sell. Instead, use this as an opportunity to buy stocks at a discounted price because we know the prices will go up eventually.