Could coronavirus really trigger a recession?

Fears are growing that the new coronavirus will infect the U.S. economy. A major U.S. stock market index posted its biggest two-day drop on record, erasing all the gains from the previous two months; companies including Apple and Walmart have been warning of potential sales losses from COVID-19 and the Centers for Disease Control and Prevention told Americans to prepare for the outbreak to spread to the United States, with unknown but potentially “bad” consequences.

Lately, many people have asked me, as an economist, a question I haven’t heard in years: Could a virus really send the global and U.S. economies into recession — or worse? Put more pertinently, will COVID-19 trigger an economic meltdown?

32 PHOTOS
Spanish flu
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Spanish flu
Masked Nurse at the Head of a Row of Beds Treating Patient during Influenza Pandemic, Walter Reed Hospital, Washington DC, USA, Harris & Ewing, 1918. (Photo by: Universal History Archive/Universal Images Group via Getty Images)
1st March 1919: Two men wearing and advocating the use of flu masks in Paris during the Spanish flu epidemic which followed World War I. (Photo by Topical Press Agency/Getty Images)
A man sprays the inside of a bus of the London General Omnibus Co with anti-flu preparation during the flu epidemic which followed the First World War, London, 2nd March 1920. (Photo by H. F. Davis/Topical Press Agency/Getty Images)
Red Cross workers of Boston, Massachussetts remove bundles of masks designated for American soldiers, while other nurses are busy making them, March 1919. (Photo by PhotoQuest/Getty Images)
A man sprays a bus of the London General Omnibus Co, with anti-flu preparation, in an attempt to kill the virus during the flu epidemic which followed the First World War, London, 2nd March 1920. (Photo by H. F. Davis/Topical Press Agency/Hulton Archive/Getty Images)
A man spraying the top of a bus with an anti-flu virus during an epidemic which followed World War I. (Photo by Davis/Getty Images)
27th February 1919: A woman wearing a flu mask during the flu epidemic which followed the First World War. (Photo by Topical Press Agency/Getty Images)
An American policeman wearing a 'Flu Mask' to protect himself from the outbreak of Spanish flu following World War I. (Photo by Topical Press Agency/Getty Images)
A patient wearing a flu mask during the flu epidemic which followed the First World War. (Photo by Topical Press Agency/Getty Images)
View of a health warning notice about influenza, from the Anti-Tuberculosis League, posted on the inside of a public transport vehicle (likely a train), 1918 - 1920. The sign reads 'Keep Your Bed Room Windows Open! Prevent influenza, pneumonia, tuberculosis' and refers to the deadly 'Spanish Flu' pandemic that swept the globe; international mortality statistics estimate that it resulted in between 20 and 100 million deaths. (Photo by Cincinnati Museum Center/Getty Images)
Female Elevator operator in New York City, NY, wearing a mask to protect against Spanish flu, New York, October 16, 1918. (Photo by PhotoQuest/Getty Images)
The St Louis Red Cross Motor Corps on duty with mask-wearing women holding stretchers at the backs of ambulances during the Influenza epidemic, St Louis, Missouri, October 1918. (Photo by Underwood Archives/Getty Images)
A New York city street sweeper wears a mask to help check the spread of the influenza epidemic, October 1918. In the view of one official of the New York Health Board, it is 'Better be ridiculous, than dead'. (Photo by PhotoQuest/Getty Images)
As protection against the influenza virus, men are seen gargling with salt and water after a day spent working in the War Garden at Camp Dix, New Jersey, September 1918. This was a preventative measure against the influenza epidemic that had spread to army camps. (Photo by PhotoQuest/Getty Images)
Members of the Red Cross Motor Corps, all wearing masks against the further spread of the influenza epidemic, carry a patient on a stretcher into their ambulance, Saint Louis, Missouri, October 1918. (Photo by PhotoQuest/Getty Images)
Demonstration at the Red Cross Emergency Ambulance Station during Influenza Pandemic, Washington DC, USA, National Photo Company, 1918. (Photo by: Universal History Archive/Universal Images Group via Getty Images)
How To Avoid Spanish Influenza Circa 1918 The expert say in effect: "Don't talk to anyone, don't go near anyone, and you are safe"' No doubt. But is not this a little difficult. (Photo by Daily Mirror/Mirrorpix/Mirrorpix via Getty Images)
An emergency flu hospital staffed by US Navy Hospital corpsman has been set up in Civic Center to help care for those stricken by the influenza outbreak, San Francisco, California, 1918. (Photo by Underwood Archives/Getty Images)
Two Red Cross nurses with a person on a stretcher during a demonstration at the Red Cross Emergency Ambulance Station during the influenza pandemic of 1918-1920, Washington DC, 1918. (Photo by Underwood Archives/Getty Images)
The Oakland Municipal Auditorium is being used as a temporary hospital with volunteer nurses from the American Red Cross tending the sick there during the influenza pandemic of 1918, Oakland, California, 1918. (Photo by Underwood Archives/Getty Images)
Two Red Cross nurses with a person on a stretcher during a demonstration at the Red Cross Emergency Ambulance Station during the influenza pandemic of 1918-1920, Washington DC, 1918. (Photo by Underwood Archives/Getty Images)
View of Philadelphia society matron, Mrs JL Ackerson, as she sits behind the wheel of an automobile, while acting as a chauffer for Fleet Hospital during the 1918 Spanish Flu epidemic, 1918. (Photo by PhotoQuest/Getty Images)
Spanish Influenza in Army Hospitals - Masks and cubicles used in USA General Hospital No 4, Fort Porter, New York, 1918. Patients' beds are reversed, alternately so breath of one patient will not be directed toward the face of another. (Photo by PhotoQuest/Getty Images)
A typist wears mask while working at her office desk, during the influenza epidemic, 1918. (Photo by PhotoQuest/Getty Images)
Masked doctors and nurses treat flu patients lying on cots and in outdoor tents at a hospital camp during the influenza epidemic of 1918. (Photo by Hulton Archive/Getty Images)
Court is held outdoors in a park due to the Influenza Epidemic, San Francisco, 1918. (Photo by Hulton Archive/Getty Images)
1918: Women sit and stand at a table while enrolling nurses during an influenza epidemic. Graphs post on the wall show mortality rates. (Photo by Hulton Archive/Getty Images)
Nurses care for victims of a Spanish influenza epidemic outdoors amidst canvas tents during an outdoor fresh air cure, Lawrence, Massachusetts, 1918 (Photo by Hulton Archive/Getty Images)
A doctor innoculates Major Peters of Boston against the Spanish Influenza virus during the epidemic, c. 1918. (Photo by Hulton Archive/Getty Images)
The congregation praying on the steps of the Cathedral of Saint Mary of the Assumption, where they gathered to hear mass and pray during the influenza epidemic, San Francisco, California. (Photo by Archive Photos/Getty Images)
Women from the Department of War take 15-minute walks to breathe in fresh air every morning and night to ward off the influenza virus during World War I, c. 1918. (Photo by Hulton Archive/Getty Images)
Vera Kholodnaya, Russian silent film actress, 1916. It is thought that Vera Kholodnaya (1893-1919) may have appereared in between 50 and 100 films, although only 5 still exist today. Official records state that she died from Spanish flu, although it has b (Photo by Fine Art Images/Heritage Images/Getty Images)
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What a virus can do

The worry is understandable; viruses are scary things. I’ve read my share of medical thrillers based on some new virus spreading throughout the globe killing millions, destroying businesses and almost ending civilization until heroes — super or not — contain it at the last minute.

While these are works of fiction, we only have to look back 100 years to find a real example of what an unchecked virus can do.

The 1918-1919 influenza pandemic, also known as the Spanish flu, killed at least 50 million people worldwide, with some estimates putting the number as high as 100 million. In the U.S., almost 1 of every 3 people became infected, and 500,000 died. Even for those who survived, there were numerous cases of long-term physical disability.

Fortunately, the adverse economic impacts were short-lived. With today’s more mobile and interconnected world, however, some suggest any large-scale pandemic would be much more severe, with costs in the trillions.

To date, deaths from the coronavirus have been very small, totaling a little over 2,700 worldwide, out of more than 80,000 known cases — or only about 3.4%. Almost all of the deaths have been in China, where the virus was first detected. Rapid actions to quarantine infected individuals have likely limited the spread.

Yet even if the death rates are relatively low, the economy can still suffer. These economic impacts would likely come in four forms: shortages of products from China, reduced sales to China, a drop in consumer spending based on fears about the virus and falling stock prices.

Let me evaluate the potential impact of each, but bear in mind that they are all interconnected, and a drop in just one can affect the others.

45 PHOTOS
Coronavirus outbreak
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Coronavirus outbreak
Vice President Mike Pence bumps elbows with Washington Gov. Jay Inslee, left, during a news conference, Thursday, March 5, 2020, at Camp Murray in Washington state. Pence was in Washington to discuss the state's efforts to fight the spread of the COVID-19 coronavirus, and officials have been avoiding shaking hands to prevent the spread of germs. (AP Photo/Ted S. Warren)
In this image from video, provided by the California National Guard, airmen with the 129th Rescue Wing drop virus testing kits down to the Grand Princess cruise ship off the coast of California Thursday, March 5, 2020. Scrambling to keep the coronavirus at bay, officials ordered a cruise ship with 3,500 people aboard to stay back from the California coast Thursday until passengers and crew can be tested, after a traveler from its previous voyage died of the disease and at least two others became infected. The California National Guard 129th Rescue Wing lowered test kits onto the 951-foot (290-meter) Grand Princess by rope as the vessel lay at anchor off Northern California, and authorities said the results would be available on Friday. Princess Cruise Lines said fewer than 100 people aboard had been identified for testing. (California National Guard via AP)
A woman wears a face mask to protect against the COVID-19 (Coronavirus) after arriving at the LAX airport in Los Angeles, California on March 5, 2020. - California has declared a state of emergency as the number of novel coronavirus cases and deaths in the US continues to climb. (Photo by Mark RALSTON / AFP) (Photo by MARK RALSTON/AFP via Getty Images)
Empty containers for travel hand sanitizer are seen at a store following warnings about COVID-19 in Kirkland, Washington on March 5, 2020. - The US reported its first case of the disease in January and its first death on February 29 -- both in the state of Washington in the country's Pacific Northwest. Since then the toll has risen to 11 and the virus has spread to at least 14 states, infecting more than 180 people, according to an AFP tally. On Thursday, Washington state officials announced a jump in cases, from 39 to 70. Ten of the 11 deaths have been reported there, with the other in California. (Photo by Jason Redmond / AFP) (Photo by JASON REDMOND/AFP via Getty Images)
Mike Weatherill, holds a photo of his mom Louise Weatherill, 85, a resident of Life Care Center who died, speaks during a press conference held by family of residents of the nursing home, where some patients have died from COVID-19, in Kirkland, Washington on March 5, 2020. - The US reported its first case of the disease in January and its first death on February 29 -- both in the state of Washington in the country's Pacific Northwest. Since then the toll has risen to 11 and the virus has spread to at least 14 states, infecting more than 180 people, according to an AFP tally. On March 5, Washington state officials announced a jump in cases, from 39 to 70. Ten of the 11 deaths have been reported there, with the other in California. (Photo by Jason Redmond / AFP) (Photo by JASON REDMOND/AFP via Getty Images)
DENVER, CO - MARCH 5: Gov. Jared Polis speaks during a press conference to address the first confirmed case of Coronavirus in Colorado at the Colorado Department of Public Health and Environment on Thursday, March 5, 2020. Gov. Jared Polis said the first confirmed individual is a man in his 30s, who traveled to Italy last month and was recreating in Colorado. Polis added that the man's girlfriend, who was traveling with him has been quarantined. A second case was reported during the press conference, but no information was provided by Polis or the officials flanking him. (Photo by AAron Ontiveroz/MediaNews Group/The Denver Post via Getty Images)
Adilisha Patrom, owner of a co-working and event space next to Gallaudet University, organizes face masks, hand sanitizer and other supplies inside her pop up shop on Thursday, March 5, 2020, in Washington. Inside her storefront, she displays different face mask models and hand sanitizer bottles alongside information from the Centers for Disease Control and Prevention. (AP Photo/Nathan Ellgren)
In this March 4, 2020 photo, two women wear masks as they ride a subway train, in New York. Two more cases of the new coronavirus have been confirmed in New York City, raising New York state's total to 13, Mayor Bill de Blasio said Thursday. (AP Photo/Richard Drew)
A security guard wears gloves while holding a basketball during halftime of an NBA basketball game between the Los Angeles Clippers and Houston Rockets Thursday, March 5, 2020, in Houston. The NBA has told players to avoid high-fiving fans and strangers and avoid taking any item for autographs, the league's latest response in its ongoing monitoring of the coronavirus crisis. (AP Photo/David J. Phillip)
Vice President Mike Pence, left, bumps elbows with Maj. Gen. Bret Daugherty, right, Adjutant General of Washington State, before a tour of the Washington State Emergency Operations Center, Thursday, March 5, 2020 at Camp Murray in Washington state to discuss the COVID-19 coronavirus. Officials are avoiding shaking hands as a precaution against the virus. (AP Photo/Ted S. Warren)
Golden State Warriors fan Brandon Lai wears a mask because of the coronavirus outbreak before attending an NBA basketball game between the Warriors and the Toronto Raptors in San Francisco, Thursday, March 5, 2020. (AP Photo/Jeff Chiu)
A police officer wears a face mask inside El Alto airport in Bolivia, Wednesday, Feb. 26, 2020. With Brazil reporting the first case of the COVID-19 virus, neighboring countries and other nations around Latin America are attempting to block the possible arrival of the virus. (AP Photo/Juan Karita)
Passengers wear face masks to protect against the COVID-19 (Coronavirus) after arriving at the LAX airport in Los Angeles, California on March 5, 2020. - California has declared a state of emergency as the number of novel coronavirus cases and deaths in the US continues to climb. (Photo by Mark RALSTON / AFP) (Photo by MARK RALSTON/AFP via Getty Images)
Foreign diplomats wearing face masks attend at a briefing by South Korean Foreign Minister Kang Kyung-wha on the situation of the COVID-19 outbreak in Korea, at the foreign ministry in Seoul Friday, March 6, 2020. (Jung Yeon-je /Pool Photo via AP)
People wearing face masks walk through a subway station in Beijing, Friday, March 6, 2020. North Korea said Friday it has released several hundred foreigners from a quarantine imposed as part of its vigilant prevention efforts to avoid an outbreak of the coronavirus that has spread around the world. (AP Photo/Mark Schiefelbein)
A worker produces hand sanitizer at the Companhia Nacional do Álcool (CNA) factory in Piracicaba, Brazil, Tuesday, March 3, 2020. Last week the factory added a second shift of workers to produce more hand sanitizer, and while the CNA was never an exporter, it's considering that by adding a third shift. One week ago, Brazil confirmed Latin America’s first case of the new coronavirus. (AP Photo/Andre Penner)
A Child is seen wearing a mask inside an MTR Train on February 22, 2020 in Hong Kong, China. the coronavirus or Covid-19 which originated from Wuhan China has infected over 77,000 and killed 2361 worldwide to date. (Photo by Vernon Yuen/NurPhoto via Getty Images)
People wear masks to help guard against the Coronavirus on a street in downtown Tehran, Iran, Sunday, Feb. 23, 2020. Iran's health ministry raised Sunday the death toll from the new virus to 8 people in the country, amid concerns that clusters there, as well as in Italy and South Korea, could signal a serious new stage in its global spread. (AP Photo/Ebrahim Noroozi)
People wear masks to help guard against the Coronavirus in downtown Tehran, Iran, Sunday, Feb. 23, 2020. On Sunday Iran's health ministry raised the death toll from the new virus to 8 people in the country, amid concerns that clusters there, as well as in Italy and South Korea, could signal a serious new stage in its global spread. (AP Photo/Ebrahim Noroozi)
This Saturday, Feb. 22, 2020, photo released by Xinhua News Agency, shows medical workers in protective suits at a coronavirus detection lab in Wuhan in central China's Hubei Province. The fresh national figures for the disease that emerged in China in December came as the number of viral infections soared mostly in and around the southeastern city of Daegu, where they were linked to a local church and a hospital. (Cheng Min/Xinhua via AP)
Mary Cahill, left, leaves a news conference where officials discussed the proposal for housing coronavirus patients at the Fairview Development Center in Costa Mesa, Calif., Saturday, Feb. 22, 2020. A court temporarily blocked the U.S. government from sending up to 50 people infected with a new virus from China to the Southern California city for quarantine after local officials argued that the plan lacked details about how the community would be protected from the outbreak. (Mindy Schauer/The Orange County Register via AP)
Personnel carry new beds inside the hospital of Codogno, near Lodi in Northern Italy, Friday, Feb. 21,2020. Health officials reported the country's first cases of contagion of COVID-19 in people who had not been in China. The hospital in Codogno is one of the hospitals - along with specialized Sacco Hospital in Milan - which is hosting the infected persons and the people that were in contact with them and are being isolated. (AP Photo/Luca Bruno)
Una persona toma fotografías cerca del crucero Diamond Princess en cuarentena, en el puerto de Yokohama, cerca de Tokio, el viernes 21 de febrero de 2020. (AP Foto/Eugene Hoshiko)
A medic worker disinfects a room in the sanatorium after the quarantine period has ended in Bogandinsky in the Tyumen region, about 2150 kilometers (1344 miles) east of Moscow, Russia, Friday, Feb. 21, 2020. 144 people who were evacuated from the epicenter of the CONVID-19 coronavirus outbreak in Wuhan, China, were released from a 14-day quarantine in western Siberia. None of them tested positive for the virus. (AP Photo/Maxim Slutsky)
Un trabajador vestido con un traje de protección rocía desinfectante como precaución contra un coronavirus en una estación de metro de Seúl, Corea del Sur, el 21 de febrero de 2020. (AP Foto/Ahn Young-joon)
Workers wearing protective gears help clean each other's suits after disinfecting as a precaution against the coronavirus at a subway station in Seoul, South Korea, Friday, Feb. 21, 2020. South Korea on Friday declared a "special management zone" around a southeastern city where a surging viral outbreak, largely linked to a church in Daegu, threatens to overwhelm the region's health system. (AP Photo/Ahn Young-joon)
Un autobús con pasajeros del buque crucero en cuarentena Diamond Princess sale del puerto de Yokohama, cerca de Tokio, Japón, jueves 20 de febrero de 2020. Dos pasajeros ancianos han muerto, siendo las primeras víctimas fatales del nuevo virus en el buque. (AP Foto/Eugene Hoshiko)
China's Foreign Minister Wang Yi speaks during a joint press conference of the Co-Chairs Special ASEAN-China Foreign Ministers' meeting on the Novel Coronavirus Pneumonia in Vientiane, Laos, Thursday, Feb. 20, 2020. (AP Photo/Sakchai Lalit)
En esta fotografía publicada por la agencia noticiosa Xinhua, un farmacéutico procesa gránulos de la medicina tradicional china en el hospital provincial de Gansu especializado en este tipo de medicina, en Lanzhou, en la provincia noroccidental china de Gansu, el jueves 20 de febrero de 2020. La medicina tradicional china se ha utilizado ampliamente para combatir la enfermedad causada por el nuevo coronavirus. (Fan Peishen/Xinhua vía AP)
En esta foto distribuida por la embajada de Ucrania en China, una pasajera ucraniana hace una señal de victoria en el bus del aeropuerto al avión chárter que evacuará a unas 70 afectadas por el brote de un nuevo virus. Entre los evacuados hay 45 ucranianos y 27 personas de Argentina, República Dominicana, Costa Rica, Panamá, Israel y Ecuador. (AP Foto/Servicio de Prensa del Ministerio del Exterior de Ucrania)
Clinical support technician Douglas Condie extracts viruses from swab samples as analytic work continues to examine the genetic structure of a virus in the coronavirus testing laboratory at Glasgow Royal Infirmary, Glasgow, Scotland, Wednesday Feb. 19, 2020. The COVID-19 virus originally centred in China now has multiple cases confirmed worldwide. (Jane Barlow/PA via AP)
In this Monday, Feb. 17, 2020, photo released by Xinhua News Agency, patients infected with the coronavirus take rest at a temporary hospital converted from Wuhan Sports Center in Wuhan in central China's Hubei Province. China reported thousands new virus cases and more deaths in its update Tuesday on a disease outbreak that has caused milder illness in most people, an assessment that promoted guarded optimism from global health authorities. (Xiao Yijiu/Xinhua via AP)
In this Monday, Feb. 17, 2020, photo, volunteers make the handmade cotton masks in Hong Kong. Volunteers from a Hong Kong theater group are turning their backstage skills to helping out against the new coronavirus, sewing reusable protective masks for those who can't access or afford them. Jo Ngai, a drama lover and founder of the Nonsensemakers, along with her friend Jessie Han, have turned a theater rehearsal room into a temporary handmade mask factory. (AP Photo/Kin Cheung)
This undated electron microscope image made available by the U.S. National Institutes of Health in February 2020 shows the Novel Coronavirus SARS-CoV-2. Also known as 2019-nCoV, the virus causes COVID-19. The sample was isolated from a patient in the U.S. (NIAID-RML via AP)
In this Feb. 16, 2020, photo, runners, some wearing masks, compete in a Kumamoto castle marathon in Kumamoto city, western Japan. Organizers of the Tokyo Marathon set for March 1, 2020 are drastically reducing the number of participants out of fear of the spread of the coronavirus from China. The general public is essentially being barred from the race. (Kyodo News via AP)
En esta imagen del 17 de febrero de 2020, autobuses con pasajeros del crucero en cuarentena Diamond Princess salen de un puerto en Yokohama, cerca de Tokio. (AP Foto/Jae C. Hong, Archivo)
Family members of Pakistani students studying in Wuhan, China, hold a demonstration calling for the evacuation of their relatives after the Chinese city was badly hit by the coronavirus, in Karachi, Pakistan, Sunday, Feb. 16, 2020. (AP Photo/Fareed Khan)
A group of quarantined passengers exercise on the Diamond Princess cruise ship Saturday, Feb. 15, 2020, in Yokohama, near Tokyo. A viral outbreak that began in China has infected more than 67,000 people globally. The World Health Organization has named the illness COVID-19, referring to its origin late last year and the coronavirus that causes it. (AP Photo/Jae C. Hong)
SEOUL, SOUTH KOREA - FEBRUARY 23: In this handout image provided by South Korean Presidential Blue House, South Korean President Moon Jae-in speaks during a meeting about coronavirus (COVID-19) at a government complex on February 23, 2020 in Seoul, South Korea. South Korea reported 169 new cases of the coronavirus (COVID-19) bringing the total number of infections in the nation to 602, with the potentially fatal illness spreading fast across the country. (Photo by South Korean Presidential Blue House via Getty Images)
Japan's Prime Minister Shinzo Abe (L) attends a meeting at the new COVID-19 coronavirus infectious disease control headquarters at the prime minister's office in Tokyo on February 23, 2020. - Japan on February 23 confirmed the first case of a former Japanese passenger of a coronavirus-stricken cruise ship testing positive for the disease after initially receiving a clean bill of health. (Photo by STR / JIJI PRESS / AFP) / JAPAN OUT (Photo by STR/JIJI PRESS/AFP via Getty Images)
TAIPEI, TAIWAN - 2020/02/23: Commuters in the Taipei MRT system all wearing surgical mask as the 2019 Novel coronavirus that originated in China is spreading to other countries worldwide. Taiwan authorities fear a serious pandemic and people are advised to wear surgical masks especially when confined in small spaces such as public transports. (Photo by Alberto Buzzola/LightRocket via Getty Images)
WUHAN, Feb. 22, 2020 -- A staff member handles nucleic acid testing samples at a novel coronavirus detection lab in Wuhan, central China's Hubei Province, Feb. 22, 2020. Since its operation on Feb. 6, the novel coronavirus detection lab named "Huoyan", jointly constructed by the local government and other institutions, has tested tens of thousands of nucleic acid testing samples. For days, including the "Huoyan" lab, Wuhan's 40 NAT institutions together, have been able to test 14,000 NAT samples per day, zeroing the number of daily NAT from all possible coronavirus patients. (Photo by Cheng Min/Xinhua via Getty) (Xinhua/Cheng Min via Getty Images)
BEIRUT, LEBANON - FEBRUARY 22: Students wear masks to protect themselves from coronavirus as a precaution in Beirut, Lebanon on February 22, 2020. Lebanese Health Minister Dr. Hamad Hassan made a statement on first coronavirus case at the Rafik Hariri University Hospital. (Photo by Hussam Chbaro/Anadolu Agency via Getty Images)
A Lebanese nurse wearing a protective mask works at a ward where the first case of coronavirus in the country is being treated, at the Rafik Hariri University Hospital in the southern outskirts of the capital Beirut, on February 22, 2020. - Lebanon confirmed on February 21, the first case of the novel coronavirus, found in a 45-year-old Lebanese woman who had travelled from the holy city of Qom in Iran, while two other cases were being investigated. (Photo by ANWAR AMRO / AFP) (Photo by ANWAR AMRO/AFP via Getty Images)
SOUTHAMPTON, ENGLAND - FEBRUARY 22: An LED screen shows Southampton's support against the coronavirus during the Premier League match between Southampton FC and Aston Villa at St Mary's Stadium on February 22, 2020 in Southampton, United Kingdom. (Photo by Alex Broadway/Getty Images)
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Product shortages

The U.S. imports over $500 billion of products each year from China, everything from smartphones and televisions to clothing and machine parts. Sick people in China can’t work, which means they can’t make products. Closing off parts of the country from other areas also curtails production.

The reduced availability of Chinese products could slow some segments of the U.S. economy, with the computer and electronics industries being the most vulnerable. For example, many smartphones sold in the U.S. are assembled in China. Although U.S. retailers have some inventory, shortages will likely appear if the pandemic persists.

Americans are already beginning to see some impacts: for example, in shortages of dozens of drugs and other medical products and longer wait times for a variety of products such as bicycles and board games.

It’s too early to say how severe it will get, but the dependency of U.S. supply chains on China is a major concern. It shows how something like the coronavirus could become a huge problem in the modern economy.

Sales may take a hit

On the flip side, U.S. companies sell well over $100 billion of products to China annually, with the most important being technology like computer chips and agricultural products such as soybeans.

These sectors have already taken a hit from the tariffs imposed by China during the U.S.-China trade war of the last two years. The recent thaw in the conflict — and a limited deal with China — had created optimism for U.S. factories and farms that increased sales were around the corner.

That corner may be harder to reach as a result of the coronavirus outbreak and its significant impact on the Chinese economy. More U.S. companies are now worrying about their sales to China as a result.

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Italy hit with coronavirus outbreak
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Italy hit with coronavirus outbreak
A medical staff with protective mask and suit walks at Dr. Fran Mihaljevic hospital for Infectious Diseases in Zagreb, on February 25, 2020 where a young Croatian man who was infected with the new coronavirus is being monitored. - Croatia reported the first known case of the new coronavirus in the Balkans region after a young man who recently returned from Italy was found to be infected. (Photo by Denis LOVROVIC / AFP) (Photo by DENIS LOVROVIC/AFP via Getty Images)
A banner reading " Thanks for all you are doing for us, you are our guardian angels, everything will be alright ", hangs on the main gate of the Spallanzani Hospital for Infectious Diseases, the Italian main hub for coronavirus treatment, in Rome, Saturday, March 14, 2020. For most people, the new coronavirus causes only mild or moderate symptoms. For some, it can cause more severe illness, especially in older adults and people with existing health problems. (AP Photo/Alessandra Tarantino)
A staffer walks at one of the emergency structures that were set up to ease procedures at the Brescia hospital, northern Italy, Thursday, March 12, 2020. Italians woke up to yet further virus-containment restrictions after Premier Giuseppe Conte ordered restaurants, cafes and retail shops closed after imposing a nationwide lockdown on personal movement. For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia. (AP Photo/Luca Bruno)
Paramedics carry an hazardous medical waste box as patients lie on camping beds, in one of the emergency structures that were set up to ease procedures at the Brescia hospital, northern Italy, Thursday, March 12, 2020. Italians woke up to yet further virus-containment restrictions after Premier Giuseppe Conte ordered restaurants, cafes and retail shops closed after imposing a nationwide lockdown on personal movement. For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia. (AP Photo/Luca Bruno)
Foto Roberto Monaldo / LaPresse 09-03-2020 Roma, Italia cronaca Emergenza coronavirus - La situazione nelle strade di Roma Photo Roberto Monaldo / LaPresse 09-03-2020 Rome (Italy) news Coronavirus emergency - The situation in the streets of Rome (Photo by LaPresse/Sipa USA)
MILAN, ITALY - FEBRUARY 25: A woman, wearing a respiratory mask, walks past a placard showing a handshake between two hands representing the Chinese and the Italian national flags and reading 'The enemy is the virus, not the people. Go China!' in the Paolo Sarpi district (Milan's Chinatown) on February 25, 2020 in Milan, Italy. The Chinese community of Milan - the largest in Italy, counting 30.000 people, mainly natives of the coastal province of Zhejiang - has decided to shut its stores and commercial activities following the outbreak of the new coronavirus. Italy is the last country to be hit hard by the virus with 7 dead and more than 288 infected as of today. The spread marks Europe’s biggest outbreak, prompting Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
MILAN, ITALY - FEBRUARY 25: A woman, wearing a respiratory mask, walks past a placard showing a handshake between two hands representing the Chinese and the Italian national flags and reading 'The enemy is the virus, not the people. Go China!' in the Paolo Sarpi district (Milan's Chinatown) on February 25, 2020 in Milan, Italy. The Chinese community of Milan - the largest in Italy, counting 30.000 people, mainly natives of the coastal province of Zhejiang - has decided to shut its stores and commercial activities following the outbreak of the new coronavirus. Italy is the last country to be hit hard by the virus with 7 dead and more than 288 infected as of today. The spread marks Europe’s biggest outbreak, prompting Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
MILAN, ITALY - FEBRUARY 25: Three people, wearing a respiratory mask, stroll in the Paolo Sarpi district (Milan's Chinatown) on February 25, 2020 in Milan, Italy. The Chinese community of Milan - the largest in Italy, counting 30.000 people, mainly natives of the coastal province of Zhejiang - has decided to shut its stores and commercial activities following the outbreak of the new coronavirus. Italy is the last country to be hit hard by the virus with 7 dead and more than 288 infected as of today. The spread marks Europe’s biggest outbreak, prompting the Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
MILAN, ITALY - FEBRUARY 25: A woman, wearing a respiratory mask, uses her smartphone as she stands in the Paolo Sarpi district (Milan's Chinatown) on February 25, 2020 in Milan, Italy. The Chinese community of Milan - the largest in Italy, counting 30.000 people, mainly natives of the coastal province of Zhejiang - has decided to shut its stores and commercial activities following the outbreak of the new coronavirus. Italy is the last country to be hit hard by the virus with 7 dead and more than 288 infected as of today. The spread marks Europe’s biggest outbreak, prompting the Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
MILAN, ITALY - FEBRUARY 25: A woman, wearing a respiratory mask, walks past the window of a pharmacy where is sticked a sign reading - both in Italian and Chinese - 'No More Masks' in the Paolo Sarpi district (Milan's Chinatown) on February 25, 2020 in Milan, Italy. The Chinese community of Milan - the largest in Italy, counting 30.000 people, mainly natives of the coastal province of Zhejiang - has decided to shut its stores and commercial activities following the outbreak of the new coronavirus. Italy is the last country to be hit hard by the virus with 7 dead and more than 288 infected as of today. The spread marks Europe’s biggest outbreak, prompting the Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
MILAN, ITALY - FEBRUARY 25: A man, wearing a respiratory mask, rides a bicycle past a shuttered store in the Paolo Sarpi district (Milan's Chinatown) on February 25, 2020 in Milan, Italy. The Chinese community of Milan - the largest in Italy, counting 30.000 people, mainly natives of the coastal province of Zhejiang - has decided to shut its stores and commercial activities following the outbreak of the new coronavirus. Italy is the last country to be hit hard by the virus with 7 dead and more than 288 infected as of today. The spread marks Europe’s biggest outbreak, prompting Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
MILAN, ITALY - FEBRUARY 25: Two people, both wearing a respiratory mask, walk past a shuttered restaurant in the Paolo Sarpi district (Milan's Chinatown) on February 25, 2020 in Milan, Italy. The Chinese community of Milan - the largest in Italy, counting 30.000 people, mainly natives of the coastal province of Zhejiang - has decided to shut its stores and commercial activities following the outbreak of the new coronavirus. Italy is the last country to be hit hard by the virus with 7 dead and more than 288 infected as of today. The spread marks Europe’s biggest outbreak, prompting Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
A man wearing a mask walks outside the H10 Costa Adeje Palace Hotel in La Caleta, on February 25, 2020, where hundreds of people were confined after an Italian tourist was hospitalised with a suspected case of coronavirus. - Tourists staying in a four-star hotel on the Spanish island of Tenerife, in the Canary archipielago, were confined to their rooms today following the announcement of a suspected novel coronavirus, COVID-19, case waiting for official confirmation. This possible case was detected yesterday in Tenerife, where an Italian national passed a first test which turned out to be positive, announced the Spanish Ministry of Health. (Photo by DESIREE MARTIN / AFP) (Photo by DESIREE MARTIN/AFP via Getty Images)
Medical staff with protective suit gestures at Dr. Fran Mihaljevic hospital for Infectious Diseases in Zagreb, on February 25, 2020 where a young Croatian man who was infected with the new coronavirus is being monitored. - Croatia reported the first known case of the new coronavirus in the Balkans region after a young man who recently returned from Italy was found to be infected. (Photo by Denis LOVROVIC / AFP) (Photo by DENIS LOVROVIC/AFP via Getty Images)
Pharmacies available for sale of sanitizing gel and protective masks, Milan, Italy, on February 25 2020. Due to the spread of the coronavirus many supermarket pharmacies have exhausted the sale of protective masks and sanitizing gels, and there are few that still sell there (Photo by Mairo Cinquetti/NurPhoto via Getty Images)
Tourists stand on the balconies of their rooms at the H10 Costa Adeje Palace Hotel in La Caleta, on February 25, 2020, where hundreds of people were confined to their rooms after an Italian tourist was hospitalised with a suspected case of coronavirus. - Tourists staying in a four-star hotel on the Spanish island of Tenerife, in the Canary archipielago, were confined to their rooms today following the announcement of a suspected novel coronavirus, COVID-19, case waiting for official confirmation. This possible case was detected yesterday in Tenerife, where an Italian national passed a first test which turned out to be positive, announced the Spanish Ministry of Health. (Photo by DESIREE MARTIN / AFP) (Photo by DESIREE MARTIN/AFP via Getty Images)
Tourists stand on the balconies of their rooms at the H10 Costa Adeje Palace Hotel in La Caleta, on February 25, 2020, where hundreds of people were confined to their rooms after an Italian tourist was hospitalised with a suspected case of coronavirus. - Tourists staying in a four-star hotel on the Spanish island of Tenerife, in the Canary archipielago, were confined to their rooms today following the announcement of a suspected novel coronavirus, COVID-19, case waiting for official confirmation. This possible case was detected yesterday in Tenerife, where an Italian national passed a first test which turned out to be positive, announced the Spanish Ministry of Health. (Photo by DESIREE MARTIN / AFP) (Photo by DESIREE MARTIN/AFP via Getty Images)
(L-R) State Council Bernhard Tilg, Director of Regional emergency medical services Franz Katzgraber, Director of Internal Medicine at the University Hospital Guenther Weiss and Head of the Institute for Hygiene and Medical Microbiology Cornelia Lass-Floerl give a press conference at the Innsbruck Hospital on the confirmed coronavirus cases in Tyrol on February 25, 2020 in Innsbruck, Austria. - Two people in Austria have tested positive for the new coronavirus, authorities said on February 25, marking the country's first cases after an outbreak in northern Italy. (Photo by Johann GRODER / APA / AFP) / Austria OUT (Photo by JOHANN GRODER/APA/AFP via Getty Images)
Medical staff with protective suit walks at Dr. Fran Mihaljevic hospital for Infectious Diseases in Zagreb, on February 25, 2020 where a young Croatian man who was infected with the new coronavirus is being monitored. - Croatia reported the first known case of the new coronavirus in the Balkans region after a young man who recently returned from Italy was found to be infected. (Photo by Denis LOVROVIC / AFP) (Photo by DENIS LOVROVIC/AFP via Getty Images)
(L-R) State Council Bernhard Tilg, Director of Regional emergency medical services Franz Katzgraber, Director of Internal Medicine at the University Hospital Guenther Weiss and Head of the Institute for Hygiene and Medical Microbiology Cornelia Lass-Floerl give a press conference at the Innsbruck Hospital on the confirmed coronavirus cases in Tyrol on February 25, 2020 in Innsbruck, Austria. - Two people in Austria have tested positive for the new coronavirus, authorities said on February 25, marking the country's first cases after an outbreak in northern Italy. (Photo by Johann GRODER / APA / AFP) / Austria OUT (Photo by JOHANN GRODER/APA/AFP via Getty Images)
A picture taken on February 25, 2020 shows a biohazard sign at the entrance of the quarantine department of Dr. Fran Mihaljevic hospital for Infectious Diseases in Zagreb where a young Croatian man who was infected with the new coronavirus is being monitored. - Croatia reported the first known case of the new coronavirus in the Balkans region after a young man who recently returned from Italy was found to be infected. (Photo by Denis LOVROVIC / AFP) (Photo by DENIS LOVROVIC/AFP via Getty Images)
Medical staff with protective suit gestures at Dr. Fran Mihaljevic hospital for Infectious Diseases in Zagreb, on February 25, 2020 where a young Croatian man who was infected with the new coronavirus is being monitored. - Croatia reported the first known case of the new coronavirus in the Balkans region after a young man who recently returned from Italy was found to be infected. (Photo by Denis LOVROVIC / AFP) (Photo by DENIS LOVROVIC/AFP via Getty Images)
NIORTHWICH, ENGLAND - FEBRUARY 25: A general view of Cransley Independent Day School which has taken the step to close for a week after pupils and staff returned from a skiing trip in the coronavirus hit region of Northern Italy on February 25, 2020 in Northwich, England. The school self imposed the closure after a small number on the skiing trip suffered flu like symptoms. (Photo by Christopher Furlong/Getty Images)
MILAN, ITALY - FEBRUARY 25: Two young women, both wearing a respiratory mask, walk in the streets on February 25, 2020 in Milan, Italy. Italy is the last country to be hit hard by the virus with 7 dead and more than 283 infected as of today. The spread marks Europe’s biggest outbreak, prompting the Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
MILAN, ITALY - FEBRUARY 25: Two young men, both wearing a respiratory mask, lend a free floating bicycle on February 25, 2020 in Milan, Italy. Italy is the last country to be hit hard by the virus with 7 dead and more than 283 infected as of today. The spread marks Europe’s biggest outbreak, prompting the Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
MILAN, ITALY - FEBRUARY 25: A young man observes her girlfriend, wearing a respiratory mask, turning her right heel on a mosaic of a bull - as a traditional sign of good luck - in Galleria Vittorio Emanuele II, on February 25, 2020 in Milan, Italy. Italy is the last country to be hit hard by the virus with 7 dead and more than 283 infected as of today. The spread marks Europe’s biggest outbreak, prompting the Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
MILAN, ITALY - FEBRUARY 25: A man, wearing a respiratory mask, takes a selfie of himself and his girlfiend in Galleria Vittorio Emanuele II, on February 25, 2020 in Milan, Italy. Italy is the last country to be hit hard by the virus with 7 dead and more than 283 infected as of today. The spread marks Europe’s biggest outbreak, prompting the Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
MILAN, ITALY - FEBRUARY 25: A woman, wearing a respiratory mask, snaps a picture of a window in Via Montenapoleone, Milan's fashion district, on February 25, 2020 in Milan, Italy. Italy is the last country to be hit hard by the virus with 7 dead and more than 283 infected as of today. The spread marks Europe’s biggest outbreak, prompting the Italian Government to issue draconian safety measures. (Photo by Emanuele Cremaschi/Getty Images)
A journalist films a board reading "Because of the outbreak in Italy, in order to reduce public activity, Best Express is provisionally closed from February 25 until March 1", on an iron curtain of a shop in the Chinese district of Milan on February 25, 2020. - The decision to close the stores was made by the Chinese community of the city of Milan as a consequence of the current health situation, following the outbreak of the new coronavirus. Several towns in northern Italy have been put under isolation measures in an attempt to stem the spread of the virus. Seven people in Italy have so far died after catching the virus, all of whom were either elderly or had pre-existing conditions. (Photo by Miguel MEDINA / AFP) (Photo by MIGUEL MEDINA/AFP via Getty Images)
People wearing respiratory masks walk in a street of the Chinese district of Milan on February 25, 2020. - The decision to close the stores was made by the Chinese community of the city of Milan as a consequence of the current health situation, following the outbreak of the new coronavirus. Several towns in northern Italy have been put under isolation measures in an attempt to stem the spread of the virus. Seven people in Italy have so far died after catching the virus, all of whom were either elderly or had pre-existing conditions. (Photo by Miguel MEDINA / AFP) (Photo by MIGUEL MEDINA/AFP via Getty Images)
The parish of the church of Zorlesco village Nunzio Rosi answers questions to a journalist at a check-point at the entrance of the small town of Zorlesco, southeast of Milan, on February 24, 2020, situated in the red zone of the COVID-19, the new coronavirus outbreak, in northern Italy. - Italy, the country with the most confirmed cases in Europe, reports its fifth death and the number of people contracting the disease continues to mount, with 219 people now testing positive. (Photo by Miguel MEDINA / AFP) (Photo by MIGUEL MEDINA/AFP via Getty Images)
MILAN, Feb. 24, 2020 -- A woman wearing a mask rides a bicycle in Milan, Italy, on Feb. 24, 2020. Six people have died and 222 have tested positive for the novel coronavirus nationwide in Italy, Angelo Borrelli, chief of Civil Protection Department and Extraordinary Commissioner for the Coronavirus Emergency, told a press conference at 6 p.m. local time on Monday. (Photo by Daniele Mascolo/Xinhua via Getty) (Xinhua/ via Getty Images)
The parish of the church of Zorlesco village Nunzio Rosi answers questions to a journalist at a check-point at the entrance of the small town of Zorlesco, southeast of Milan, on February 24, 2020, situated in the red zone of the COVID-19, the new coronavirus outbreak, in northern Italy. - Italy, the country with the most confirmed cases in Europe, reports its fifth death and the number of people contracting the disease continues to mount, with 219 people now testing positive. (Photo by Miguel MEDINA / AFP) (Photo by MIGUEL MEDINA/AFP via Getty Images)
MILAN, Feb. 24, 2020 -- People wearing masks are seen in Milan, Italy, on Feb. 24, 2020. Six people have died and 222 have tested positive for the novel coronavirus nationwide in Italy, Angelo Borrelli, chief of Civil Protection Department and Extraordinary Commissioner for the Coronavirus Emergency, told a press conference at 6 p.m. local time on Monday. (Photo by Daniele Mascolo/Xinhua via Getty) (Xinhua/ via Getty Images)
A man wearing face mask, in Turin, Italy, on February 24, 2020. More than 220 people were infected by Covid-19 in Italy, with 6 people deaths. Italy is at the third place in the world ranking as infected countries, after China e South Korea. Italy has disposed the closure of schools, university, pubs and imposed a stop to religious functions in Lombardia and Veneto regions. (Photo by Mauro Ujetto/NurPhoto via Getty Images)
MILAN, ITALY - 2020/02/24: A man wearing a face mask walks with his friend in Corso Como. Precautionary measures, such as wearing face masks have been taken by citizens and tourists in Milan, for dealing with the fear of being infected by Coronavirus (COVID -19), as more than one hundred confirmed cases have been discovered in north Italy and three old people died. According to a regional decree, many activities (educational, cultural, museum tours etc) will be suspended until 1st or 2nd March; thus, people reacted with a massive rush to buy water, food supply and soaps. (Photo by Valeria Ferraro/SOPA Images/LightRocket via Getty Images)
MILAN, ITALY - 2020/02/24: A view of Empty shelves in a local supermarket. Precautionary measures, such as wearing face masks have been taken by citizens and tourists in Milan, for dealing with the fear of being infected by Coronavirus (COVID -19), as more than one hundred confirmed cases have been discovered in north Italy and three old people died. According to a regional decree, many activities (educational, cultural, museum tours etc) will be suspended until 1st or 2nd March; thus, people reacted with a massive rush to buy water, food supply and soaps. (Photo by Valeria Ferraro/SOPA Images/LightRocket via Getty Images)
Healthcare staff operating in the screening of Coronavirus at the Martini hospital in Turin operate to separate usual patients from potentially infected by Covid-19, in Turin, Italy, on February 24, 2020. More than 220 people were infected by Covid-19 in Italy, with 6 people deaths. Italy is at the third place in the world ranking as infected countries, after China e South Korea. Italy has disposed the closure of schools, university, pubs and imposed a stop to religious functions in Lombardia and Veneto regions. (Photo by Mauro Ujetto/NurPhoto via Getty Images)
MILAN, ITALY - 2020/02/24: A family wearing face masks stand at the hall of Porta Garibaldi Station. Precautionary measures, such as wearing face masks have been taken by citizens and tourists in Milan, for dealing with the fear of being infected by Coronavirus (COVID -19), as more than one hundred confirmed cases have been discovered in north Italy and three old people died. According to a regional decree, many activities (educational, cultural, museum tours etc) will be suspended until 1st or 2nd March; thus, people reacted with a massive rush to buy water, food supply and soaps. (Photo by Valeria Ferraro/SOPA Images/LightRocket via Getty Images)
MILAN, ITALY - 2020/02/24: An Asian woman shops at a local supermarket. Precautionary measures, such as wearing face masks have been taken by citizens and tourists in Milan, for dealing with the fear of being infected by Coronavirus (COVID -19), as more than one hundred confirmed cases have been discovered in north Italy and three old people died. According to a regional decree, many activities (educational, cultural, museum tours etc) will be suspended until 1st or 2nd March; thus, people reacted with a massive rush to buy water, food supply and soaps. (Photo by Valeria Ferraro/SOPA Images/LightRocket via Getty Images)
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Consumers still spending

Ultimately, more than anything, the spending of consumers drives the U.S. economy, accounting for roughly 70% of growth. Economists, policymakers and traders will be closely watching measures of this to help them understand how worried they should be.

Significant declines in spending are usually the most direct cause of a recession and often signal falling incomes and higher unemployment. But consumers also reduce spending as a result of fear — such as when they see traders panicking on Wall Street. That is, nothing actually bad has to happen to reduce spending, and this fear-induced penny pinching can have real-world consequences and even trigger a recession.

We saw this happen with the SARS virus in 2003, which resulted in 700 deaths worldwide. Consumer confidence about the future dipped, and so did spending, especially on durable products like appliances, vehicles and furniture. Fortunately, the dip was short-lived, and no recession resulted.

Although coronavirus-related deaths already exceed those from SARS, consumer confidence has not yet been affected. The latest data, released on Feb. 25, shows it continued to rise in February, albeit at a slower-than-expected pace and based on a survey taken before the recent stock market swoon. And measures of consumer spending like retail sales are also still growing, if at a subdued rate.

Also, there could be two positive offsets from the virus that will boost consumers. One is a reduction in interest rates that has already occurred and will be welcome news for people borrowing money for a home or vehicle. Second is a drop in oil — and, ultimately, gas – prices that will mean less money to be paid at the pump.

So it appears, for now, that consumers are more focused on jobs, incomes and gas prices than on COVID-19.

A rocky road for stocks

Lastly, let’s look at the impact on stocks.

One thing traders and investors absolutely do not like is uncertainty. And that’s what we have right now: No one, not even me, knows how bad the outbreak will get or what the impact will be on companies, consumers and the economy.

Until we have a good idea of how much the virus will spread and whether containment efforts will be successful, markets could remain wobbly. The Dow Jones Industrial Average fell 6.6% on Feb. 24 and 25 in its worst drop ever, ending a bull market that lasted 12 years.

A falling stock market could affect the real economy in a number of ways, including by sapping consumer confidence and reducing their spending.

But just as a bout of bad news can send markets into a tailspin, a reason for optimism could cause a rebound just as fast.

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Market down due to coronavirus fears
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Market down due to coronavirus fears
Traders work in front of a board displaying the chart of Germany's share index DAX at the stock exchange in Frankfurt am Main, western Germany, on February 28, 2020. - Stock markets plunged further Friday, February 28, 2020, with equities on course for the largest weekly drop since the global financial crisis more than a decade ago on fears that the coronavirus could devastate the world economy, while oil prices tanked as well. (Photo by Daniel ROLAND / AFP) (Photo by DANIEL ROLAND/AFP via Getty Images)
28 February 2020, Hessen, Frankfurt/Main: An exchange trader at the Frankfurt Stock Exchange looks at his monitors. The most important German leading index, the Dax, fell by more than 5 percent in the morning. Concerns about a corona epidemic have been weighing on financial markets worldwide for days. Photo: Boris Roessler/dpa (Photo by Boris Roessler/picture alliance via Getty Images)
Mask-clad commuters make their way to work during morning rush hour at the Shinagawa train station in Tokyo on February 28, 2020. - Tokyo's key Nikkei index plunged nearly three percent at the open on February 28 after US and European sell-offs with investors worried about the economic impact of the coronavirus outbreak. (Photo by CHARLY TRIBALLEAU / AFP) (Photo by CHARLY TRIBALLEAU/AFP via Getty Images)
Mask-clad commuters make their way to work during morning rush hour at the Shinagawa train station in Tokyo on February 28, 2020. - Tokyo's key Nikkei index plunged nearly three percent at the open on February 28 after US and European sell-offs with investors worried about the economic impact of the coronavirus outbreak. (Photo by CHARLY TRIBALLEAU / AFP) (Photo by CHARLY TRIBALLEAU/AFP via Getty Images)
Mask-clad commuters make their way to work during morning rush hour at the Shinagawa train station in Tokyo on February 28, 2020. - Tokyo's key Nikkei index plunged nearly three percent at the open on February 28 after US and European sell-offs with investors worried about the economic impact of the coronavirus outbreak. (Photo by CHARLY TRIBALLEAU / AFP) (Photo by CHARLY TRIBALLEAU/AFP via Getty Images)
Mask-clad commuters make their way to work during morning rush hour at the Shinagawa train station in Tokyo on February 28, 2020. - Tokyo's key Nikkei index plunged nearly three percent at the open on February 28 after US and European sell-offs with investors worried about the economic impact of the coronavirus outbreak. (Photo by CHARLY TRIBALLEAU / AFP) (Photo by CHARLY TRIBALLEAU/AFP via Getty Images)
NEW YORK, NY - FEBRUARY 27: Traders work on the floor of the New York Stock Exchange on February 27, 2020 in New York City. With concerns growing about how the coronavirus might affect the economy, stocks fell for the fourth straight day. The Dow Jones Industrial Average lost almost 1200 points on Thursday. (Photo by Scott Heins/Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower Thursday, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower Thursday, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower Thursday, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Traders work during the opening bell at the New York Stock Exchange (NYSE) on February 27, 2020 at Wall Street in New York City. - Wall Street stocks opened sharply lower Thursday, joining a sell-off in most global bourses on fears the coronavirus will grow into a significant international health crisis. About five minutes into trading, the Dow Jones Industrial Average was down 1.8 percent, or about 480 points. The blue-chip index has fallen the last five days. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
The TSE Arrows market centre is seen at the Tokyo Stock Exchange (TSE) in Tokyo on February 26, 2020. - Tokyo stocks opened lower on February 26 extending losses on Wall Street, as the coronavirus continued to spread and public officials warned of the increasing likelihood of a pandemic. (Photo by Kazuhiro NOGI / AFP) (Photo by KAZUHIRO NOGI/AFP via Getty Images)
A pedestrian stands in front of an electronic quotation board displaying share prices of the Nikkei 225 Index in Tokyo on February 26, 2020. - Tokyo stocks opened lower on February 26 extending losses on Wall Street, as the coronavirus continued to spread and public officials warned of the increasing likelihood of a pandemic. (Photo by Kazuhiro NOGI / AFP) (Photo by KAZUHIRO NOGI/AFP via Getty Images)
TOKYO, JAPAN - FEBRUARY 25: Pedestrians wearing face masks walk past a monitor displaying the Nikkei 225 index and other financial figures outside a securities firm on February 25 in Tokyo, Japan. The Nikkei index dropped more than 3.5 percent at the open on Monday as global concerns grow about the economic impact of the Coronavirus. (Photo by Tomohiro Ohsumi/Getty Images)
NEW YORK, NY - FEBRUARY 25: Traders work through the closing minutes of trading Tuesday on the New York Stock Exchange floor on February 25, 2020 in New York City. Fueled by deepening concerns of the Coronavirus becoming a global pandemic, the stock market plunged Tuesday, with the Dow Jones Industrial Average losing almost 900 points. (Photo by Scott Heins/Getty Images)
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Brace for impact – and uncertainty

For now, we’ll all — traders, companies, consumers — have to just live with uncertainty, not knowing just how bad it will get.

The best all of us can do is monitor the situation and take precautions to prevent its spread — and be ready if it does.

A key measure to watch is the trend in the number of new cases reported worldwide. A reduction is often a sign the virus is running its course. However, a jump in cases could be cause for alarm, especially if the increase is large.

Companies and industries in the U.S. having strong ties to China or other countries with major infections could be in for a rocky road ahead, but with any luck the challenges will last weeks or months – not years. As long as U.S. consumers continue to spend, the economy will continue to expand, and there’s little risk of recession. If the stock market tumbles further, however, all bets may be off.

This article was originally published on The Conversation by Michael Walden. Read the original article here.

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