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Westlake Legal Group > Posts tagged "United States Economy" (Page 5)

Stocks Jump After a Wild Day: Live Market Updates

Here’s what you need to know:

Shares on Wall Street rose on Wednesday, bouncing back from a steep drop the day before that had been fueled by concerns over the worldwide coronavirus outbreak.

From Tokyo to New York, financial markets have been on a roller coaster for the past two weeks as investors grapple with the potential damage that the coronavirus could inflict on the global economy, as fractured supply chains, travel bans imposed by companies and governments, and the disruption of daily life take their toll.

After falling nearly 3 percent on Tuesday, the S&P 500 was up more than 1 percent Wednesday morning. Shares in Europe were also higher, while markets in Asia had been mixed as traders there looked for more signals on how global leaders would respond.

ImageWestlake Legal Group merlin_170009937_9db64030-f377-43c6-9d74-88ba4b9a842f-articleLarge Stocks Jump After a Wild Day: Live Market Updates United States Economy Travel Warnings Stocks and Bonds Federal Reserve System Epidemics Credit and Debt Coronavirus (2019-nCoV)

Traders work on the floor of the New York Stock Exchange on Wednesday.Credit…Justin Lane/EPA, via Shutterstock

In the United States, the rosier outlook might partly reflect Wall Street’s appraisal of the Super Tuesday primary election results, which revived Joseph R. Biden Jr.’s campaign against Senator Bernie Sanders, whose plans to take on banks and tax stock and bond trades have worried many in the financial community.

The most obvious indication of this was a spike in shares of health care companies. Mr. Sanders aims to eliminate most private health insurance as part of a single-payer health care plan. Shares of the insurer UnitedHealth Group were up more than 12 percent.

There is little clarity about how long it will take governments and health officials to contain the virus, leading to a gloomy prognosis for global economic growth.

Get an informed guide to the global outbreak with our daily coronavirus newsletter.

On Tuesday, the Federal Reserve validated those concerns by announcing an emergency cut in interest rates, only a few hours after leaders of the world’s largest economy said they would refrain from concrete action.

On Wednesday in Europe, the FTSE 100 index in Britain was 1.4 percent higher. The DAX in Germany gained 1.1 percent, while the CAC 40 index in France was up 1.2 percent.

In Tokyo, the Nikkei 225 index ended 0.1 percent higher, and Hong Kong’s Hang Seng Index finished 0.2 percent lower. In China, the Shanghai Composite Index rose 0.6 percent.

The head of the International Monetary Fund warned on Wednesday that the economic fallout of the coronavirus would be more “dire” than previously thought and said that uncertainty would remain until policymakers could more clearly assess the duration of the outbreak.

The I.M.F. said in late February that it was reducing its 2020 global growth forecast by 0.1 percentage points to 3.2 percent, with a more dramatic slowdown in China weighing on the global economy.

“We have unfortunately seen a shift towards a more adverse scenario for the global economy,” Kristalina Georgieva, the managing director of the I.M.F., said at a briefing on Wednesday.

Treasury Secretary Steven Mnuchin said at a congressional hearing on Wednesday that it was too early to predict the impact of the virus on the economy around the world or in the United States. He said he had not seen major disruptions to global supply chains but that he expected some industries, such as travel, to face headwinds.

Mr. Mnuchin said that he believed it was safe for most Americans to travel.

“I’d be very comfortable getting on a commercial plane today if I were personally traveling,” he told reporters before the hearing.

As conferences around the world are canceled over virus concerns, including annual developer summits hosted by Facebook and Google, the popular South by Southwest festival will continue as planned.

Organizers of the conference, held in Austin, Tex., said their plans have not changed, even as companies like TikTok and Twitter pulled out of their scheduled appearances. By Wednesday, more than 42,000 people had signed a petition to call off the gathering, which is scheduled for March 13-22.

Health officials have said that at least one person in Travis County, where the city is located, is being tested for coronavirus. But Dr. Mark Escott, the interim health authority for Austin Public Health, said there was no evidence right now that closing the festival would make the community safer.

He said government officials were concerned that “canceling large events that impact the economy, that may lead to job loss, has some downstream effects that may be hard to quantify.”

Conference organizers have promised to screen workers before the event and make more hand-washing and sanitizing stations available, Dr. Escott said. They have also discussed limiting the number of people allowed into venues, he added.

Another tech conference planning to go ahead is introducing strict rules. SaaStr, a business software conference scheduled for next week in San Jose, Calif., said it will ban residents of the most affected countries — China, South Korea, Italy and Iran — as well as anyone who has visited those places in the past 60 days.

All attendees will need to show a U.S. driver’s license or a passport to enter. Citizens of China, South Korea, Italy and Iran will also be subject to additional screening, organizers said.

Organizers plan to check all attendees’ temperatures via “passive scanning.” They also banned handshakes and mandated that attendees wash their hands before each session. “This may create some lines,” the organizers said. “Our apologies.”

Larry Birnbaum, who owns the Lightbulb Store in Hackensack, N.J., which manufactures and distributes LED products, said 95 percent of his stock comes from China, and nothing has arrived in the last month.

On average, Mr. Birnbaum said, he orders $100,000 in LED light bulbs from China every month, the equivalent of roughly 1,000 bulbs. When he paid the balance on his last order about a month ago, the factory called him and said the Chinese government said that it wouldn’t be able to ship the bulbs and that the soonest it could was maybe the end of April or beginning of May.

“Maybe is a scary word,” Mr. Birnbaum said. “I’ve been in the lighting business for 47 years. I’ve never seen anything like this.”

  • Ford Motor Company told its employees on Tuesday to stop all domestic air travel in the United States, and to use videoconferences as much as possible for critical meetings. Rare exceptions will be made for travel that is critical to Ford operations, requires employees to be on site and does not put anyone at risk, the company said.

  • The Bank of Canada cut rates on Wednesday by 50 basis points, to 1.25 percent, following the Fed’s move on Tuesday. So did Hong Kong’s monetary authority also cut rates on Wednesday and central banks in the United Arab Emirates, Qatar and Bahrain.

  • The London Book Fair, one of the publishing industry’s biggest international events of the year, was canceled on Wednesday because of concerns related to the coronavirus in Europe.

  • General Electric said the coronavirus outbreak would probably cost it as much as $300 million in operating profit in the first quarter. It described the virus’s impact as an “evolving variable.”

  • The Hannover Messe, a major industrial technology fair in Germany scheduled for April, was postponed because of coronavirus concerns; it will now take place in July. Google said on Tuesday that it was canceling its annual developers conference because of similar concerns. The Google I/O event was scheduled to take place May 12-14 in Mountain View, Calif.

  • Amazon learned that an employee in one of its office buildings in the South Lake Union neighborhood of Seattle had tested positive for the virus, the company said in an email to its staff late Tuesday.

Reporting was contributed by Geneva Abdul, Neal E. Boudette, Julie Creswell, Sophia June, Jeanna Smialek, Alan Rappeport, Karen Weise and Daisuke Wakabayashi.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Fed Makes Emergency Rate Cut as Markets Tremble Over Coronavirus

In an extraordinary attempt to contain the coronavirus’s economic fallout, the Federal Reserve slashed interest rates on Tuesday as policymakers unanimously approved their biggest one-time cut — and first emergency rate move — since the depths of the 2008 financial crisis.

Stocks in the United States rallied for about 15 minutes after the rate cut, but worries about the Fed’s impotence in the face of economic risks from the coronavirus quickly fueled a market sell-off. By late Tuesday, stocks were sharply lower and bond yields had plummeted to previously unthinkable lows as investors sought a safe place to park their money.

The S&P 500 fell about 2.8 percent, undoing some of Monday’s 4.6 percent surge. The yield on 10-year Treasury notes dipped below 1 percent.

Interest rates are now set in a 1 percent to 1.25 percent range, and Jerome H. Powell, the Fed chair, signaled that further moves were possible. “The virus and the measures that are being taken to contain it will surely weigh on economic activity, both here and abroad, for some time,” Mr. Powell said at a news conference, adding the Fed was “prepared to use our tools and act appropriately, depending on the flow of events.”

But the market’s negative reaction may reflect a recognition that cutting interest rates or engaging in other types of fiscal stimulus will do little to contain the virus that has sickened more than 90,000 people, with major outbreaks taking hold in South Korea, Japan, Iran and Italy.

How Markets React to Emergency Rate Cuts

Over the last two decades, stocks have had a mixed response on the day of surprise Fed actions, a sign that the central bank’s support is not always enough to overcome a risky backdrop.

Westlake Legal Group emergency-cuts-335 Fed Makes Emergency Rate Cut as Markets Tremble Over Coronavirus United States Economy Interest Rates Federal Reserve System Federal Open Market Committee Coronavirus (2019-nCoV)

Changes in the S&P 500 on the day the Fed made an emergency rate cut

Oct. 15, ’98

Long Term Capital

Management collapses

Jan. 3, ’01

Tech. stocks

bubble bursts

April 18, ’01

Economy slumps

Sept. 17, ’01

First day stock market

opens after 9/11

Aug. 17, ’07*

Subprime-mortgage

crisis widens

Jan. 22, ’08

Signs of a

recession increase

Oct. 8, ’08

Lehman Bros. collapses

March 3, ’20

COVID-19 worries grow

Westlake Legal Group emergency-cuts-600 Fed Makes Emergency Rate Cut as Markets Tremble Over Coronavirus United States Economy Interest Rates Federal Reserve System Federal Open Market Committee Coronavirus (2019-nCoV)

Changes in the S&P 500 on the day the Fed made an emergency rate cut

First day stock

market opens

after 9/11

Signs of a

recession

increase

Lehman

Bros.

collapses

COVID-19

worries

grow

Sept. 17, ’01

Jan. 22, ’08

Oct. 8, ’08

March 3, ’20

Oct. 15, ’98

Jan. 3, ’01

April 18, ’01

Aug. 17, ’07*

Long Term

Capital

Management

collapses

Tech.

stocks

bubble

bursts

Economy

slumps

Subprime-

mortgage

crisis

widens

*Cut in the discount rate; all others are cuts in the fed funds rate.

Sources: Federal Reserve (rate cuts); Refinitiv (stock market data)

By The New York Times

More than 100 people are infected in the United States, with new cases emerging in some big metro areas, including Fulton County, Ga.; Cook County, Ill.; San Mateo County, Calif.; Westchester County, N.Y.; and Maricopa County, Ariz. Washington State reported another fatality from the coronavirus on Tuesday, raising the U.S. death toll to nine.

While cutting rates can bolster confidence and help to keep borrowing cheap, it cannot prevent disease from spreading or help companies deal with delayed orders or sick workers.

“We do recognize that a rate cut cannot reduce the rate of infection, it won’t fix a broken supply chain,” Mr. Powell said. “We get that — we don’t think we have all the answers.”

If anything, containing the longer-term economic fallout may necessitate preventive actions that will weigh on near-term economic growth, like restricting air travel, closing movie theaters, shuttering factories and quarantining workers. China, the initial source of the outbreak, has engaged in those types of restrictions, hurting its economy temporarily but enabling it to slow the virus’s spread.

Get an informed guide to the global outbreak with our daily coronavirus newsletter.

Anthony S. Fauci, the director of the Centers for Disease Control and Prevention, called China’s measures “rather draconian” on Tuesday at a news conference but acknowledged that they had slowed the number of virus cases. “They have taken social distancing to its farthest extreme,” he said.

Many economists predict that the United States could face a significant slowdown — or even a recession — if efforts to contain an outbreak here fail.

Neil Dutta, the head of economic research at Renaissance Macro Research, wrote in a note after the announcement that “the Fed’s tools are imperfect and not adequate to deal with a public health crisis.” He added that “the panic needs to come from the opposite of 17th Street” — which is where the White House is.

President Trump said on Tuesday that he might further tighten limits on international travel in hopes of blocking the arrival of more visitors infected by the coronavirus, but he ruled out for now any restrictions on travel within the United States.

“We’re not looking at that at all,” Mr. Trump said. “But we’re looking at other countries and we’re being very stringent,” he told reporters before boarding his Marine One helicopter to fly to the National Institutes of Health for a visit.

Vice President Mike Pence said the C.D.C. would lift all restrictions on testing for the coronavirus and would release new guidelines to fast-track testing for people who fear they have it, even if they are displaying only mild symptoms. But Mr. Pence said the federal government did not intend to dictate school or office closings, saying that “these decisions are best made at the state and local level.”

The World Bank, in an attempt to help countries deal with the health and economic effects of the outbreak, said it would make $12 billion worth of financing available. David Malpass, the World Bank president, said the money would be used to strengthen health systems, improve access to health services and enhance disease surveillance, particularly in poorer countries.

Investors still expect the Fed to do more, and are anticipating another quarter-point cut at the central bank’s meeting on March 18, potentially followed by another move in April. But the central bank is running low on room to cut rates to avert a significant downturn if things worsen, which could be fueling market jitters. Going into the last recession, from 2007 to 2009, the Fed cut rates from above 5 percent. Now it will have just four quarter-point moves left at its disposal.

“Maybe there’s a stronger sense that we’re closer to being out of ammo. This is a real shock, and what is a rate cut going to do?” said Julia Coronado, a founder of the research firm MacroPolicy Perspectives. “We don’t know where it is, who has it, or how far it is going to spread.”

Other economists speculated that markets might have seen the action as a signal that economic fundamentals are crumbling.

“This could be seen as a panic move,” Ryan Sweet at Moody’s Analytics said in a note, calling the Fed’s decision to move in between scheduled meetings “risky.”

But this time, the central bank moved pre-emptively — trying to get ahead of an economic problem, rather than waiting until damage was more fully realized. Unemployment in the United States remains at a 50-year low, and most economic indicators do not yet reflect a virus fallout.

As recently as late January, the Fed signaled it expected to hold rates steady, with no plans to raise or lower borrowing costs after ushering in three cuts in 2019. But officials at its last policy meeting were already growing concerned about the virus’s potential effects, and in February, Mr. Powell warned that China’s struggles with the virus could pose broader economic risks.

The Fed’s move came after central banks in Australia and Malaysia lowered borrowing costs early Tuesday and after a joint statement from the leaders of the Group of 7 — which includes Britain, Canada, France, Germany, Italy, Japan and the United States — pledged global coordination and cooperation in containing fallout from the coronavirus.

Mr. Trump, who has played down the economic effect of the virus, has been urging the Fed to cut rates to better compete with other countries that have low or negative borrowing costs. The Fed’s half-point cut did little to assuage his complaints.

“Finally. Do it more. Do it a little bit more,” the president said of the rate cut. “We’re paying more than other countries; we should be paying less than everybody else. We have the dollar. We have the strength. We have the greatest country on Earth.”

Asked if political pressure fueled the cut, Mr. Powell said that in making decisions, he and his colleagues were “never going to consider any political considerations whatsoever.”

For now, the White House seems unconvinced other measures will be necessary. Treasury Secretary Steven Mnuchin, speaking Tuesday before House lawmakers, insisted that the current volatility was not comparable to the 2008 financial crisis and that the disruptions to travel and supply chains would abate. However, he made clear that the Trump administration was preparing for the economy to take a hit this year.

“I would say this is not different than any severe situation,” Mr. Mnuchin said. “This is going to have an impact on the short term in the economy.”

The Treasury Department has created a task force to develop stimulus proposals, should additional efforts be needed, he said, adding that he was looking at ways to help businesses if they needed support.

Lawmakers were also working on an emergency spending bill worth $7 billion to $8 billion. The package, which has been quickly negotiated over the past few days, is expected to be significantly larger than what the White House initially proposed eight days ago: $1.25 billion in new funds, paired with a transfer of existing funds from other health programs.

Mr. Trump continued to suggest that Democrats pass a temporary payroll tax cut, but that seemed unlikely to gain traction. Representative Richard E. Neal, the chairman of the House Ways and Means Committee, told Mr. Mnuchin that any stimulus package should be centered around infrastructure investment rather than additional tax cuts. Mr. Mnuchin said that infrastructure would be central to any such package.

Mr. Powell did not specify whether the economy needed Congress and Mr. Trump to provide some form of fiscal stimulus like tax cuts or spending increases. He also would not say what economic data points might cause the Fed — or other central banks — to take additional steps to protect the economy.

“Central banks are doing what makes sense in their particular institutional contexts,” he said. “But we’re all talking to each other on an ongoing basis.”

Charles L. Evans, the president of the Federal Reserve Bank of Chicago, said on Tuesday night that the onus was on federal authorities, not the Fed.

“You’ve got to recognize that the key response to the virus has to come from the federal authorities, and the health community, to make sure that we all stay safe,” he said, adding that he expected the economy to bounce back after a short-term pullback in demand. “This is the type of event that you would expect to be short-lived.”

Katie Rogers and Alan Rappeport contributed reporting.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Global Health Crisis 1, Economic Policymakers 0

Westlake Legal Group 03virus-policy-1-facebookJumbo Global Health Crisis 1, Economic Policymakers 0 United States Economy Recession and Depression Interest Rates Group of Seven Federal Reserve System Europe Economic Conditions and Trends Coronavirus (2019-nCoV)

LONDON — The people who worry about money had hoped for so much more. The news that the world’s wealthiest countries were convening to orchestrate a response to the deadly coronavirus outbreak had resonated across economies like the sound of whirring helicopters bringing relief to a disaster zone.

But the relief proved underwhelming. As leaders of the Group of 7 nations ended impromptu consultations on Tuesday with only a general expression of solidarity and refrained from concrete action — no pledge to cut interest rates, no promise of coordinated government spending — they underscored an uncomfortable truth animating fears about the virus: Policymakers tasked with limiting its economic damage appear to be laboring under the assumption that their tool kit is nearly empty.

In Washington, the Federal Reserve followed the group’s statement with the surprise announcement that it was dropping short-term interest rates by half a percentage point, momentarily delighting stock markets. But investors soon resumed fearful selling amid the realization that cheaper money is of limited use in combating the crisis. Easier loan terms will not restart production at factories whose workers are being kept home to avoid getting or spreading the illness.

Governments have tools that could limit the costs, but have been reluctant to use them, economists said. They could give cash to employees whose workplaces are shut, provide credit to small businesses and offer rescue packages to industries most affected, like airlines and other tourism-related concerns.

Their unwillingness to take such approaches appears to reflect a widespread political aversion to increasing public debt.

In the United States, the Trump administration delivered a $1.5 trillion package of tax cuts two years ago — its benefits overwhelmingly directed at the wealthiest households and corporations — and then began warning of the need to shrink budget deficits while seeking to cut programs that provide health care and housing to poor people.

In Europe, where the coronavirus has renewed worries about recession, the 19 nations that share the euro currency are restricted in how much debt they can amass.

The crisis has offered the latest glimpse of an established truth in the world’s largest economies: Public money can frequently be found for tax cuts, but then disappears into a fog of warnings about the dangers of deficits when spending for nearly anything else is discussed.

“If you don’t spend money for people put out of work with no fault of their own when there’s a clear public-health virtue in making it in workers’ interests to stay home and not spread the virus, then everything else by comparison is a complete waste,” said Adam S. Posen, a former member of the rate-setting committee at the Bank of England and now the president of the Peterson Institute for International Economics in Washington.

Get an informed guide to the global outbreak with our daily coronavirus newsletter.

“We’ve got this notion that we are always overspending,” Mr. Posen continued, “but in the end we do only overspend on things for business, and for very privileged interest groups. We never spend enough for average working people.”

Whatever international leaders propose, they are contending with a nasty feedback loop that appears beyond the traditional economic-policy playbook.

The fundamental threat to the world economy is the continued spread of the coronavirus. The outbreak initially shut down great reaches of manufacturing in China, threatening the global supply chain for a vast array of goods, from auto parts to electronics. Then it went global, assailing industry from South Korea and Japan to Italy and Germany.

Desperate to limit the reach of the virus, governments have imposed quarantines, encouraged workers to stay home and generally frightened people into avoiding travel, restaurants, trade shows and other activities that run the risk of encountering other human beings. All of that has inflicted economic damage, prompting warnings of a potential global recession.

In seeking to limit the threat to the global economy — the spread of the virus — governments have imposed policies that have damaged the global economy.

Despite the mystical aura that seems to surround their undertakings, central banks have no magical powers to cut through this perilous state of affairs. They traditionally wield one potent tool, their influence over short-term interest rates.

When economies struggle and workers are threatened with joblessness, central banks nudge interest rates lower, making credit cheaper, encouraging businesses and households to borrow, spend and invest. That is a proven approach when trouble hits the so-called demand side of the economy — that is, when people and businesses lose their appetite to consume out of fear of some looming danger, or when wages fall and unemployment increases, diminishing spending power.

But when the problem hits the supply side — that is, when businesses have difficulty making their goods because they cannot secure raw materials, cannot get their products to market or encounter some other impediment — cutting interest rates tends to be futile. It is like handing coupons to shoppers and sending them to a store that is closed.

As an economic event, the coronavirus episode presents an unusual combination: It is a shock to the supply and demand sides of the economy at the same time. It is limiting industrial production, sowing chaos in the supply chain, while also constraining consumer spending by making a trip to a shopping mall or a journey on an airplane feel like a recklessly dangerous activity.

At the same time, central banks are operating with limited options given that they are still positioned to fight the last great threat, the global financial crisis of 2008. From North America to Europe to Asia, central banks dropped interest rates to zero and even below in a bid to spur commerce.

In many economies, prominently Europe and Japan, rates remain in that vicinity. When rates are that low — meaning credit is cheap for anyone who can get it — dropping them further does not produce much impact.

“Monetary policy is less effective when it’s already super loose,” said Marie Owens Thomsen, global chief economist at Indosuez Wealth Management in Geneva. “Economic theory doesn’t really give us a template for what to do.”

The Fed appears to have taken action not out of some misplaced dream that lower interest rates are an antidote to the economic contagion, but in the hope of altering the psychology around it. The rate cut sends the message that grown-ups are looking out with concern.

“Fear is totally capable of causing a recession on its own,” Ms. Owens Thomsen said.

But psychology plays multiple ways. Some saw in the Fed’s action — its first emergency rate cut since the financial crisis — a sign that matters are even worse than feared.

“This move has the benefit of looking like action, but at first glance smells panicky,” Jeremy Thomson-Cook, chief economist at Equals, a money management firm in London, said in a statement. The move “could easily backfire by hinting that something extremely negative is about to come over the hill, possibly a recession.”

The rate cut was essentially priced into stock values. Had the Fed not dropped interest rates, stock markets might have plunged to new depths on fears that world authorities are impotent in the face of the outbreak.

But lifting stock prices is not supposed to be the central bank’s concern (even as that frustrates President Trump, who touts stock market rallies while demanding lower interest rates). Rather, the Fed is meant to seek stable prices and full employment.

For years, prominent economists have warned that the world has become addicted to monetary policy and its crisis spawn, low interest rates, as the appropriate response for nearly every economic concern. In this view, governments must unleash the power of their budgets. They must transcend their aversion to spending money and increase taxes on wealthy people to secure the revenue to build more infrastructure and bolster government programs.

Italy, the epicenter of the outbreak in Europe, has long sought relief from the budget strictures attendant to using the euro. But that has collided with the politics of Germany, Europe’s largest and most influential economy, where a profound cultural abhorrence of debt has prompted the government to enforce budget austerity across the continent.

As the members of the Group of 7 wrapped up their meeting with only broad promises to take action as needed, and as the Fed delivered the only substantial policy move in the world’s leading economy, some argued that public spending was again being neglected.

“The tools available to the authorities are somewhat limited,” said Richard Portes, an economist at the London Business School. “But a coordinated fiscal stimulus on the expenditure side, and individually targeted at a national level, that would be a good thing.”

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Is Fiscal Stimulus the Answer to Preventing a Coronavirus Recession?

ImageWestlake Legal Group merlin_108456655_6cee443d-dfe2-40b5-a93a-c7d88ac412dd-articleLarge Is Fiscal Stimulus the Answer to Preventing a Coronavirus Recession? United States Politics and Government United States Economy Trump, Donald J Presidential Election of 2020 Federal Budget (US) Coronavirus (2019-nCoV)

President George W. Bush signing the economic stimulus act of 2008.Credit…Manuel Balce Ceneta/Associated Press

As governments seek to contain the economic damage from the coronavirus outbreak, expect to hear two words that have been absent from the Washington lexicon for years: fiscal stimulus.

Prominent economists and some lawmakers — most notably the senator and presidential candidate Elizabeth Warren, who released a stimulus plan Monday — are starting to wrestle with how the government might use its power to tax and spend to mitigate the economic pain.

The attention to fiscal policy reflects the little room remaining for the Federal Reserve to cut interest rates — the usual first line of defense against economic slumps. That is all the more relevant after a half-percentage point surprise rate cut that the Fed announced Tuesday morning. The complexities of responding to a pandemic and the desire of lawmakers to show they are getting something done in an election year could strengthen the case for a fiscal boost.

“This is not a shock that central banks alone can address,” Laurence Boone, chief economist of the Organization for Economic Cooperation and Development, told reporters in a briefing Monday. “It really, really needs to be accompanied by fiscal measures.”

In a statement Tuesday morning, the Group of 7 finance ministers and central bankers raised the possibility as well, saying they “are ready to take actions, including fiscal measures where appropriate,” to help with the response to the virus and to support economies.

Talk of fiscal stimulus is still in the earliest phases, reflecting the suddenness with which signs have emerged that the new coronavirus will hurt the economy.

A senior administration official said Monday afternoon that Mr. Trump and his advisers think that any bumps in the next quarter or two are likely to be temporary, and that they don’t think temporary policies work to stimulate growth.

But in a tweet late Monday evening, President Trump seemed to endorse a one-year payroll tax holiday, suggesting stimulus along those lines would be “great for the middle class, great for the USA!”

Those who closely track the machinations of Washington believe there will be a meaningful push for some fiscal action if the economic outlook deteriorates. Whether it would eventually pass, of course, is a different matter given deep partisan divides in Congress.

“I think members of Congress and the White House are contemplating what their options are,” said Brian Gardner, who tracks economic policy in Washington as managing director at Keefe Bruyette & Woods. “We’re in an era of hyperpartisanship, and neither party is going to want to give the other a win going into the election.

“At the same time I think politicians don’t want to be seen as stonewalling on a possible answer to a crisis, so I think the politics are a little more friendly to getting some kind of fiscal package through than it might seem.”

Ms. Warren on Monday proposed a $400 billion package of measures to pump money into the economy.

She suggested the government offer low-interest loans to companies affected by temporary coronavirus disruptions; expand unemployment insurance and other direct payments to Americans; and give aid to state and local governments losing money because of the virus.

Her plan also included provisions less directly connected to addressing immediate damage from the virus, such as encouraging American-made manufacture of pharmaceuticals and clean energy investments.

If Congress does move toward fiscal stimulus in the coming months, it will be an uncommonly quick response to an economic threat.

In early 2008, for example, the George W. Bush administration and congressional Democrats successfully negotiated a $152 billion stimulus meant to ease the effects of the housing crash and a financial crisis then underway. But that came about six months after financial markets first flashed signs of panic, in August 2007.

It would probably take some more solid evidence that the virus was causing deteriorating business conditions for Congress and the Trump administration to conclude that action was needed. But that time shouldn’t be wasted, said Jason Furman, former chief White House economist in the Obama administration, who is now at the Harvard Kennedy School.

“I think people should be preparing a fiscal expansion,” Mr. Furman said. “It may very well be needed. But even like two or three weeks of additional information might be useful.”

He draws a distinction between spending needed to address the public health risks from coronavirus — most likely several billion dollars on things like medical equipment and aid to states dealing with the crisis — and the kind of spending that might be warranted to prop up overall demand in the economy. The latter would probably run in the hundreds of billions of dollars.

In that stimulus scenario, the goal would be to put more money into Americans’ pockets, such as with payroll tax reductions or more generous unemployment insurance benefits, to ensure that disruptions because of coronavirus do not spill out into an economywide recession.

Douglas Holtz-Eakin, a former director of the Congressional Budget Office and president of the American Action Forum, said that the new coronavirus would be likely to have a short but substantial effect on the economy — a “V” shape — and that it would be difficult to create a stimulus that matched the timing and severity of the economic disruption.

“Do we know enough about the V shape to merit a policy response?” Mr. Holtz-Eakin said. “It makes me skeptical. It’s really hard.”

At a minimum, he says, if Congress considers a stimulus, it ought to look at policies that are desirable on their own terms, not merely for what they might do to aggregate demand in the economy for a quarter or two.

Even if there is more of a widespread embrace of fiscal policy as the virus’s economic impact broadens, the politics will be fraught.

President Trump has repeated that the economy is strong, the virus well contained. He says the recent decline in the stock market is a result of an alarmist media and insufficient interest-rate cuts by the Federal Reserve. Presumably, he would need to modify that outlook to justify a nine-figure stimulus package.

And Democrats who control the House would be reluctant to give President Trump an economic boost heading into the November elections. They would probably demand a high price in the form of the Republican Senate’s agreeing to Democratic spending priorities.

All of that makes the legislative prognosis for stimulus uncertain at best. But so is the level of risk the economy faces. And if conditions get bad, it has a way of forcing even bitter political enemies to the negotiating table.


Jim Tankersley contributed reporting.

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Economic Powers Vow to Fight Crisis

Westlake Legal Group 03dc-virusecon1-facebookJumbo Economic Powers Vow to Fight Crisis United States Economy United States Powell, Jerome H Interest Rates Federal Reserve System Economic Conditions and Trends Coronavirus (2019-nCoV) Banking and Financial Institutions

Central bankers and political leaders of the United States and other economic powers expressed their resolve to combat economic damage from the coronavirus on Tuesday, but stopped short of promising interest rate cuts or other immediate rescue measures.

The joint statement of solidarity from the leaders of the so-called G7 nations, which also includes Britain, Canada, France, Germany, Italy and Japan, was intended to show global coordination and cooperation. But it fell short of the more aggressive action that investors have been hoping for and that many economists say could help to prevent the virus outbreak from undermining global growth.

Investors were underwhelmed and markets in the U.S. opened down, with the S&P 500 index sliding as much as 0.8 percent in early trading. European stock indexes dropped on the G7 announcement before recovering some of those losses.

Global finance ministers and central bankers said they “are closely monitoring the spread of the coronavirus disease” and that “given the potential impacts” of the virus on global growth, “we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks.”

Officials promised no concrete plans, only a commitment to use their taxing and spending authorities “where appropriate” to help mitigate any economic impact.

“Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase,” the statement said.

Global policymakers added that “central banks will continue to fulfill their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system.”

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That pledge falls far short of the coordinated global rate cut that investors had been anticipating from the world’s largest economies.

“It was all a nothing-burger,” said Seth Carpenter, an economist at UBS and a former top researcher at the Fed Board. “It’s the ‘where appropriate’ that makes you go — OK, it’s more rhetoric than content.”

“The market got very bulled up on the idea of something happening today before markets opened,” he added.

Mr. Mnuchin, who participated in the G7 call, said the Trump administration is working with other countries to do everything possible to curb the spread of the virus and limit its harm on the global economy.

“The administration is closely monitoring the coronavirus and its effect on public health as well as any effects on supply chains, markets and the broader economy,” Mr. Mnuchin said at a hearing before House lawmakers. He said the White House wants to work closely with Congress on an emergency funding package.

President Trump on Monday night called on Democrats to pass a temporary payroll tax cut but Representative Richard E. Neal, the chairman of the House Ways and Means Committee, told Mr. Mnuchin that any stimulus package should be centered around infrastructure investment rather than additional tax cuts. Mr. Mnuchin said that infrastructure would be central to any such package.

“If there’s a need to stimulate the economy as a result of the coronavirus, I’m sure that infrastructure is a priority of the president,” Mr. Mnuchin said.

The mere fact that the G7 held an emergency gathering underlines what a fraught moment this is for the world’s economy. The coronavirus outbreak has torn across the globe, sickening about 90,000 people. While the vast majority of those are still in China, where the infections first surfaced, major outbreaks have also taken hold in South Korea, Japan, Iran and Italy, and cases are climbing in other countries. Six deaths have been reported in the United States.

The virus could exact a heavy economic toll in the G7 countries, as it leads to quarantines, shutters factories, and hits investor and consumer confidence. But central bankers have limited ability to act, because borrowing costs are already low across major economies.

While the Federal Reserve still has leeway to cut interest rates, the European Central Bank and Bank of Japan have spent the last decade struggling to lift inflation and growth, all but exhausting their monetary policy weapons. They will probably prefer to husband their resources until the extent of the economic damage becomes clearer.

That has not prevented markets from looking to central banks for a first-line response. Australia’s central bank cut its main policy rate to 0.5 percent Tuesday, a record low, and Malaysia cut rates for the second time this year. Investors anticipate rate cuts as early as this month from the European Central Bank, Bank of England and Federal Reserve, based on money market pricing.

“It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path,” Philip Lowe, Australia’s central bank governor, said in a statement.

Political leaders in hard-hit countries such as Italy have been promising relief to businesses whose sales have collapsed because people are staying home and factories are closed. But governments in countries like Germany have been reluctant to increase spending, which would mean taking on more debt.

Expectations for a rate cut by the Fed have grown in recent days, with investors now pricing in a 50 basis point cut in March. The Fed chair, Jerome H. Powell, on Friday signaled the Fed was ready to act as appropriate, but stopped short of promising action.

President Trump has continued to pressure Mr. Powell to cut rates, saying the central bank is putting the United States at a disadvantage to other countries with lower borrowing costs. He did so again on Tuesday morning, saying in a tweet that Mr. Powell, “has called it wrong from day one. Sad!”

Alan Rappeport contributed reporting

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Fed Slashes Interest Rates as Coronavirus Fears Mount

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The Federal Reserve slashed interest rates on Tuesday as fears about the economic fallout of the coronavirus mounted.

“The coronavirus poses evolving risks to economic activity,” the Fed said in a statement. “In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate.”

The statement on the vote, which was unanimous, also pledged that the Fed “is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”

Rates are now set in a range of 1 percent to 1.5 percent, as of the decision.

Stocks in the United States rallied after the Fed said it would cut interest rates. After opening lower at the start of trading, the S&P 500 spiked more than 1 percent immediately after the cut was announced.

The move underlines what a fraught moment economic policymakers in the United States and around the world currently face. Coronavirus has torn across the globe, sickening about 90,000 people. While the vast majority of those are still in China, where the infections first surfaced, major outbreaks have also taken hold in South Korea, Japan, Iran and Italy, and cases are climbing in other countries.

The virus could exact a heavy economic toll, as it leads to quarantines, shutters factories, and hits investor and consumer confidence.

Stocks bled through their worst losses since 2008 last week, but rebounded Monday as expectations for action from the central bank climbed.

While the Fed can bolster confidence and help to keep borrowing cheap, there are questions about how effective rate cuts will be in counteracting the fallout from the virus. Central banks cannot keep the disease from spreading, prevent workers from losing hours at work, or mend broken supply chains amid factory delays.

President Trump, who has no control over monetary policy, has been urging the Fed to lower interest rates when asked about the virus’ potential economic fallout.

“As usual, Jay Powell and the Federal Reserve are slow to act,” he wrote on Twitter Monday, referring to the chair of the Federal Reserve.

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Could the Coronavirus Cause a Recession (and How)?

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Epidemiologists are nervously tracking signs that the coronavirus is spreading widely beyond its origins in China. Economists are watching for much the same thing when it comes to the economic damage.

The global outbreak has caused upheaval in stock markets and disrupted supply chains around the world. But so far, there have been few signs of widespread economic damage, at least in the United States. Most employers aren’t laying off workers. Consumers are still spending. Shops and restaurants remain open.

Economists say a pandemic could clearly cause a recession in the United States. But for that to happen, the effects would have to spread beyond manufacturing, travel and other sectors directly affected by the disease. The real sign of trouble, said Tara Sinclair, an economist at George Washington University, will be when companies with no direct connection to the virus start reporting a slump in business.

“The key is to watch big macro numbers rather than obsessively watching things tied to virus and supply chains,” Ms. Sinclair said. “If people aren’t getting haircuts anymore, that’s a bad sign.”

The coronavirus epidemic is evolving rapidly, and no one can predict the economic impact with any confidence. Instead, analysts tend to think in terms of scenarios — what are the different ways the situation could play out? And what are the risks that existed even before the virus struck?

The outbreak has already caused factories to be closed, flights grounded and events canceled. Entire cities in Asia and Europe are nearly shut down. Apple, Mastercard, United Airlines and dozens of other companies have warned that the virus will hurt profits.

The Organization for Economic Cooperation and Development said Monday that global growth could be cut in half, to 1.5 percent in 2020, if the virus continues to spread. Laurence Boone, the group’s chief economist, warned that the forecast was “not a worst-case scenario.”

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The United States will not be immune. Goldman Sachs estimated over the weekend that the outbreak would reduce economic growth by a full percentage point in 2020. Forecasters now expect the Federal Reserve to cut interest rates at its meeting this month — or perhaps even earlier — to contain the damage.

The economy was growing at an annual rate of only around 2 percent before the virus hit. So if the outbreak worsens, it isn’t hard to imagine that gross domestic product might fall outright.

But a recession is more than just a dip in gross domestic product. As most economists think of it, a recession involves a cycle that feeds on itself: Job cuts lead to less income, which leads to less spending, which leads to more job cuts. (Of course, that doesn’t go on indefinitely, especially if central banks and governments intervene forcefully to kick-start growth.)

“Consumer spending being 70 percent of the economy, you are going to have to see it on the consumer side for this to take the U.S. economy down,” said Claudia Sahm, a former Fed official who is now director of macroeconomic policy for the Center for Equitable Growth, a progressive think tank. She noted that some researchers had studied how shocks spread through the economy, using methods originally developed to model the spread of disease.

Think about hurricanes or earthquakes. A bad natural disaster can easily cause output to decline in one part of the country, as stores close, shipments are delayed and people stay in their homes or shelters. A really bad one might even cause a dip in G.D.P.

But barring other factors, the economy should snap back once the water recedes or the ground stops shaking. In fact, natural disasters are often followed by a temporary increase in economic activity, as people rebuild. In that way, disasters are different from financial crises, for example, which don’t just reduce spending and investment in the short term but also make people and companies less willing or able to spend for months or years.

So far, the coronavirus outbreak looks more like a hurricane than like a financial crisis — but that could change quickly.

Here’s how a coronavirus could cause a recession: As fear of the virus spreads, Americans stop going to restaurants, concerts and the movies. Airlines cancel domestic flights. Sports leagues scrap games. Hotels, museums and amusement parks close.

Then, with less revenue and no certainty on when business will bounce back, companies start laying off employees. Newly unemployed workers pull back spending further, and others, fearful that their jobs could be next, do the same. That hurts demand for an even wider array of products, forcing more layoffs and pushing some companies into bankruptcy.

Or imagine a slight twist: Supply-chain disruptions make it hard for manufacturers to get parts, and for retailers to stock shelves. With nothing to sell, they have to lay off workers, setting off the same cycle of job losses and reduced spending.

The common element in both cases: Once the direct effects of the coronavirus spread to the job market, the ripples reach much further into the economy. If that happens, the economy might remain sluggish even after the outbreak is controlled.

“The question is whether it pushes firms so far that they go out of business or start laying employees off,” said Karen Dynan, a Harvard economist and former official in the Treasury Department. “That’s where you can get the bigger impacts on the economy.”

The impact of the coronavirus won’t show up in economic statistics right away. Hardly any data is available from February, when the virus began to spread widely beyond China, and its effect on jobs and spending might not be clear until the spring or summer.

The few indicators that are available so far paint a mixed picture. In the University of Michigan’s survey of consumer sentiment, 20 percent of respondents interviewed last week cited the coronavirus as a concern, and even they were relatively confident about the economy on average. Recent surveys from the Federal Reserve Bank of Kansas City and the Institute for Supply Management similarly found that companies were nervous about the virus but that business activity was still increasing.

Such sentiment indicators could be among the first to detect trouble. Economists will also be watching weekly claims for unemployment insurance to see if layoffs are picking up and monthly retail sales data for signs that consumers are deferring restaurant meals or other spending. Measures of financial conditions, such as an index from the Federal Reserve Bank of Chicago, should signal whether financial institutions become reluctant to lend, another way the outbreak could slow the broader economy.

One indicator that economists do not recommend focusing on is the stock market. Yes, stocks just had their worst week since the 2008 financial crisis. And yes, the evaporation (at least on paper) of some $6 trillion in wealth could cause some people to reconsider buying new cars or splurging on vacations, a phenomenon economists call the “wealth effect.”

But the stock market is dominated by multinational corporations. Its drop — at least before a resurgence on Monday — reflected fears of what a pandemic could mean for Asia and Europe as well as the United States. And the wealth effect, though real, isn’t that big — most Americans don’t own stocks outside of retirement accounts, so the effects of a short-term drop are limited.

Before the coronavirus spread, hardly any forecasters expected a recession in 2020. The unemployment rate is near a 50-year low. Inflation is tame. The housing market has been gaining strength, and job growth has been steady.

That underlying momentum could help prevent a recession. Businesses that have been struggling to find enough workers may be reluctant to lay them off at the first sign of trouble. Households have relatively little debt, giving them a buffer during a slowdown.

But many companies have heavy debt loads, which could make it harder for them to weather any virus-induced slowdown. Business investment was already falling, and President Trump’s trade war has taken a toll on the manufacturing sector. Most economists already expected growth to slow enough this year to leave the economy vulnerable.

“A lot of forecasters have been saying, ‘If we were to see a recession in the next year or two, it would be coming from some external shock,’ and indeed that’s just what we’re getting,” Ms. Dynan said.

Most economists still expect the United States to escape a recession, although other countries probably won’t be so lucky. And they say a coronavirus-caused recession would probably be relatively minor. But that might not be much comfort — economists are notoriously bad at predicting recessions.

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Economic Group Warns That Virus Could Significantly Slow Global Growth

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A major multinational economic group cut its outlook for 2020 as coronavirus cases show up around the globe, suggesting that global growth could be cut in half if infections spread widely outside of China.

The Organization for Economic Cooperation and Development said that if the outbreak sweeps through the Asia-Pacific region, Europe and North America, global growth could fall to just 1.5 percent in 2020, far less than the 3 percent it projected before the virus surfaced.

Even if the outbreak is mild and mostly contained outside of China — the O.E.C.D.’s expected scenario — global growth could be lowered by around half a percentage point relative to previous forecasts, according to an update the group released on Monday ominously titled, “Coronavirus: The World Economy at Risk.”

The spread of the coronavirus outside China has sent markets reeling as investors anticipate painful economic fallout. Economists across Wall Street revised their outlook for 2020 downward, with some predicting a global recession if things get bad enough.

Analysts from the O.E.C.D., a forum of 36 countries meant to foster cooperation and trade, stopped short of forecasting an all-out global downturn. But they said that if its more adverse scenario is realized, it “could push several economies into recession, including Japan and the euro area.”

The economic risks posed by the coronavirus are unpredictable. It is unclear how far and fast infections will spread, so it is also hard to guess the economic fallout from such actions as widespread quarantines and supply chain disruptions. Outbreaks in China, Japan, Iran, Italy and South Korea have already closed many factories and slowed or halted tourism. Even in the United States, which has had few cases, major companies like Twitter and Amazon have told their employees to avoid nonessential travel.

Central banks have signaled that they stand ready to act, and investors have begun looking to the Federal Reserve and its global counterparts for relief. The Fed chair, Jerome H. Powell, released a statement on Friday pledging that the central bank would “act as appropriate” to protect growth.

Even under the O.E.C.D.’s main scenario, in which the virus is quickly contained, its economists anticipate that China’s central bank and many of its global counterparts would lower interest rates by a quarter percentage point or more.

That said, the report went on, “There is limited need for further reductions in policy interest rates in the United States unless the risks of a sharper growth slowdown rise.”

Should the virus spread more widely, countries that have room to cut rates are likely to lower them by 1 percentage point on average in 2020, according to the report. But central banks in South Korea, the United Kingdom, and Australia all have limited room to lower borrowing costs, which are already low, and would hit zero in the report’s scenario.

“The increasing constraints on monetary policy suggest that a swift and sizable discretionary fiscal response would be needed in event of a scenario of this type occurring,” the O.E.C.D. said. “This reinforces the need for stronger global policy cooperation.”

Last week’s sharp drop in stock markets “adds to the persisting financial vulnerabilities from the tensions between slower growth, high corporate debt and deteriorating credit quality, including in China,” the report said. “These developments raise the risk of significant corporate stress if risk aversion intensifies from already high levels.”

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Wall Street Has Lost Its Nerve. What Will It Take to Get It Back?

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Wall Street has often adopted a simple playbook when facing a stock market plunge: “Buy the dip.” Not lately.

In recent years, investors who jumped on downturns as chances to buy shares at bargain prices have profited from the move. Their buying, in turn, helped stabilize prices, snuffing out slumps before they morphed into panics.

But last week, as coronavirus cases turned up around the world and new information kept pouring in — photographs of deserted business districts in Milan, a stark warning from an official at the Centers for Disease Control and Prevention on Tuesday, news that a single Google employee in Switzerland had tested positive for the virus on Friday — big investors across Wall Street lost their nerve, interpreting the steep fall in share prices not as an invitation to go bargain-hunting but as a reason to dump more stock.

“This is one of the few times in recent history where we’ve seen them meeting that with selling and not buying,” said Mike Lewis, head of U.S. equity cash trading at Barclays, referring to big investors like hedge funds and pension funds that tend to employ sophisticated trading strategies.

The result: the worst weekly rout for stocks since the 2008 financial crisis.

The coming week will be another test for investors. Wall Street culture fetishizes forecasts and figures. Analysts and investors are rewarded for their ability to correctly gauge risk, incorporate those assessments into accurate forecasts and then make trades based on them. As a result, investors despise uncertainty, because it makes it difficult to generate good guesses about the future.

And uncertainty is pervasive right now. The coronavirus — highly contagious, with new cases emerging daily, and millions still facing lockdowns in the world’s second-largest economy, China — is creating exactly the kind of unpredictability that makes investors fret. There is little clarity about how long it will take governments and health officials to contain the virus, leading to a gloomy prognosis for global economic growth. Supply chains remain deeply disrupted. Consumer spending may suffer if daily life is disrupted by the virus.

Markets are as precarious as they’ve been since stocks started climbing in March 2009 after the financial crisis. In such cases, investors tend to sell to limit their losses or wait for clarity to emerge, which could take weeks, if not months.

  • Answers to your most common questions:

    Updated Feb. 26, 2020

    • What is a coronavirus?
      It is a novel virus named for the crownlike spikes that protrude from its surface. The coronavirus can infect both animals and people and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.
    • What if I’m traveling?
      The C.D.C. has warned older and at-risk travelers to avoid Japan, Italy and Iran. The agency also has advised against all nonessential travel to South Korea and China.
    • Where has the virus spread?
      The virus, which originated in Wuhan, China, has sickened more than 80,000 people in at least 33 countries, including Italy, Iran and South Korea.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is probably transmitted through sneezes, coughs and contaminated surfaces. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • Who is working to contain the virus?
      World Health Organization officials have been working with officials in China, where growth has slowed. But this week, as confirmed cases spiked on two continents, experts warned that the world was not ready for a major outbreak.

“You need to show that the virus is under control,” said Jack Janasiewicz, a portfolio manager with Natixis Investment Managers. “Until that happens, we’re going to be in these volatile swings.”

But instead, federal health officials have warned that the virus will spread. Over the coming days, Americans will probably hear updates on new infections, and perhaps deaths. (The first reported virus death in the United States, of a man in Washington State, was announced on Saturday.)

Already, during last week’s panic, updates on even a single new infection were at times enough to move multitrillion-dollar financial markets. The most recent economic data has been bleak. Official Chinese surveys of activity in the factory sector released over the weekend, showed even deeper contraction than expected.

The jitters could continue.

“Anytime you see another headline, you almost instantaneously see a reaction in the markets,” said Subadra Rajappa, head of U.S. rates strategy at Société Générale in New York, said Friday. “Clearly there’s a lot of skittishness.”

Even if, as is now expected, the Federal Reserve cuts interest rates this month, an action that has been a balm for market woes over the last decade, that may not be enough to put things back on a surer footing.

“The playbook for the last 10 years, you should throw out the window,” Alan Fournier, who trades his own money through a family office in Summit, N.J. “Because this virus doesn’t care what the Fed does.”

Since the 2008 financial crisis ended, America’s decade-long economic expansion has hardly been smooth. But when growth faltered, the Fed has reliably stepped in to act — pumping new money into financial markets or cutting interest rates, or both.,

Those actions kept the economy chugging, and helped stocks rebound. . The dynamic repeatedly rewarded investors who used market setbacks as buying opportunities.

But this time, traders, investors and analysts expect any action from the Fed to have limited impact, at least on the economy. Unlike previous periods of stress, including the U.S. government shutdown fights in 2011 or the trade war with China that started in 2018, the current crisis of confidence is tied more to epidemiology than economics.

So whether the market turns around depends on those who make health policy and communicate information to the public, rather than officials who determine monetary policy.

The Fed can still help calm market fears to some extent. On Friday, a brief statement from the Fed that it stands ready to support the economy helped the market rally off the worst of its lows. More soothing words could come in the days ahead, potentially reversing some of last week’s decline in stocks.

But even if markets see a short-term bounce, it could take longer to restore the investor confidence — or complacency — that pushed stocks to record highs a little more than a week ago. After all, investors just endured the second-worst week for the S&P 500 stock index since 1941 and one the fastest 10 percent declines on record. Nose dives like that are psychological events for investors as much as financial ones.

“The positive economic outlook that people had for 2020 and beyond that was not realistic,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “The coronavirus helped bring that down and the stock market helped bring that down. But I don’t think you can put Humpty Dumpty back on the wall again.”

What’s most needed, investors say, is time. It will take weeks before the American public and investors have enough information to know if the country is facing significant economic disruption from the outbreak or a relatively benign scenario in which the spread of the virus is relatively quickly brought under control. It will also take weeks before the impact of the outbreak appears in economic data. Analysts will watch government economic reports for indications that news coverage of the virus, and the market’s tumble, spooked shoppers and threatens consumption, the main engine of U.S. growth.

“It is not the kind of thing that the market will quickly bounce back from,” said Ajay Rajadhyaksha, an analyst with Barclays in New York. “They will need to see evidence through the passage of time.”

Kate Kelly contributed reporting.

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A Virus Spreads, Stocks Fall, and Democrats See an Opening to Hit Trump

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WASHINGTON — Democratic presidential candidates have seized on President Trump’s response to the spreading global coronavirus outbreak, and the growing threat it poses to America’s record-long economic expansion, to attack the president on what has been his greatest strength with voters: the economy.

Until last week, the candidates had largely attacked Mr. Trump’s economic management on inequality grounds, at a time when growth has been steady and unemployment has sunk to a half-century low. But they have begun to attack his stewardship more directly after fears over the effects of the virus dealt stock markets their worst week since 2008 and forced Federal Reserve officials to reassure investors that they were considering interest rate cuts to combat a potential growth slowdown.

Two candidates in desperate need of delegates on Super Tuesday, Senator Elizabeth Warren of Massachusetts and former Mayor Michael R. Bloomberg of New York, revamped their stump speeches in recent days to aggressively attack Mr. Trump’s handling of the issue and portray themselves as the type of president the United States needs to endure a potential economic and public health crisis.

Mr. Trump has played down the virus, insisting several times last week that it might not spread any further in the United States, and the economic threats from it. And he has lashed out at Democrats, saying they were the ones spooking investors.

“Stock Market starting to look very good to me!” he tweeted on Monday, before four more days of losses. As markets continued to slide, he and members of his administration encouraged Americans to buy stock. “The market will all come back,” Mr. Trump told reporters on Saturday. “The markets are very strong. The consumer is unbelievably strong.”

Mr. Bloomberg told a Democratic Party dinner in Charlotte, N.C., on Saturday night that “the White House is endangering lives and hurting our economy” in its response to the virus. He has reserved three minutes of paid network airtime on Sunday evening to address the nation on the subject.

“We all know the stock market has plunged out of fear,” Mr. Bloomberg said in Charlotte, “but also because investors have no confidence that this president is capable of managing the crisis.”

Ms. Warren, who warned last summer that the economy could be tipped into recession by an outside shock, also called the virus an economic crisis in a speech Saturday night in Houston. She called for targeted stimulus measures, including direct support from Congress to businesses that have seen supply chains disrupted by quarantines and factory shutdowns in Asia, and low-interest loans from the Fed “to companies that agree to support their workers and that need a little help to make it through the next few months.”

“The impact on our families, particularly on babies and elderly people and people with other health challenges, could be severe” from the spread of the virus, she said. “And the impact on our economy could also be brutal, putting jobs risk, threatening savings, undermining economic stability and even potentially destabilizing our giant, globally interconnected banks.”

The front-runners in the race, Senator Bernie Sanders of Vermont and former Vice President Joseph R. Biden Jr., who won the South Carolina primary Saturday, have also criticized Mr. Trump’s management of the virus response. They have focused less than Ms. Warren and Mr. Bloomberg on the economic effects and have emphasized public health issues.

Asked on Friday in a CNN interview how bad he thought the economic woes from the virus could get, Mr. Biden replied, “Well, I’m less concerned about the immediate economic impact than I am about whether or not we gain control of this.” He went on to criticize the Trump administration’s response. “The concern is: Do they have any idea what they’re doing?”

None of the candidates have changed their core economic platforms, which to varying degrees all call for trillions of dollars in new taxes on the wealthy to fund programs meant to help the middle class and the poor. And they have often cited threats from the virus as new evidence to support the need for their plans, such as universal health care.

Mr. Sanders said in a tweet last week that the outbreak showed that “it has never been more important to finally guarantee health care as a human right by passing Medicare for All.”

Mr. Trump has called for the Federal Reserve to slash interest rates, though some economists caution that such a move may have a limited effect. And he has hinted at middle-class tax cuts, though tax experts who have spoken with the administration see the effort as more of a campaign centerpiece than an immediate stimulus package.

Democratic strategists say the virus — and its potential economic effects — have given candidates a new opportunity to criticize Mr. Trump’s management abilities.

“Candidates are right to be critical when the president and his economic team are whistling past the graveyard and putting out happy talk about the economy when it’s clear that a significant disruption is happening globally,” said Ben LaBolt, a partner at Bully Pulpit Interactive who was the press secretary for President Barack Obama’s 2012 re-election campaign. “There’s no doubt it could be a defining issue of the campaign.”

Economic forecasters say the spread of the virus in China — and the supply chain disruptions it has already caused — will at least temporarily slow growth around the world, including in the United States, this year.

Some economists expect the U.S. and global economies to rebound in the second half of the year, with minimal lasting damage: Goldman Sachs and Bank of America researchers have marked down their forecasts for U.S. growth this year by 0.1 percent because of virus effects.

Still, Goldman Sachs economists warned in a research note last week that “the risks are clearly skewed to the downside until the outbreak is contained.”

Morgan Stanley researchers said on Friday that in a worst-case scenario, where the virus spreads more widely across countries and sectors of the economy, growth could slow to a near halt in the United States for much of this year, resulting in a 0.5 percent growth rate overall in 2020, which would be the worst since the financial crisis. The unemployment rate would climb back above 5 percent in that projection.

Such a slowdown could hamstring Mr. Trump’s re-election prospects. Voters give him significantly higher marks on economic management than his overall performance as president.

That strength, and a relative lack of interest in economic issues among Democratic voters, has complicated candidates’ efforts to criticize Mr. Trump on his signature issue.

Some pockets of the Democratic electorate, particularly black voters, rate the economy as their top concern, according to a new nationwide poll conducted for The New York Times by the online research firm SurveyMonkey. But Democratic voters overall rate health care and the environment as more important issues. They are about half as likely as independent voters to call the economy a top issue.

Over the course of the campaign, Democratic candidates have generally sought to emphasize that the strong economy was not being felt by ordinary Americans, who they insisted were struggling to make ends meet. Several candidates blame Mr. Trump’s trade war with China for hurting American workers. Mr. Sanders and Ms. Warren have called for broad transformations of the economy, with far steeper taxes on wealthy people and corporations. The leading Democratic candidates are all eager to raise taxes on the rich, though they disagree about how far to go with increases.

Mr. Bloomberg and Ms. Warren levied more direct attacks this weekend, while championing their own qualifications to steer the country through economic tumult. Mr. Bloomberg said he had dealt with public health and economic crises as a mayor, as a philanthropist and as the leader of his business, Bloomberg L.P., “so I understand the economic damage that bad policies can cause.”

Ms. Warren said on Saturday night that the crisis demanded a more skilled leader than Mr. Trump or several of her Democratic rivals, taking shots at Mr. Sanders, Mr. Biden and Mr. Bloomberg. The moment required “someone whose core values can be trusted, who has a plan for how to govern and who can actually get it done,” she said.

Mr. Trump, in turn, has blamed his Democratic rivals for unnerving investors. “I think they’re not very happy with the Democrat candidates, when they see them,” he told reporters on Friday. “I think that has an impact.”

Jim Tankersley reported from Washington, and Thomas Kaplan from Charlotte, N.C.

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