Coronavirus Crash Not (Yet) as Bad as Previous Downturns
Considering the carnage we’ve seen over the past three weeks, it’s hard to believe that the U.S. stock market was at an all-time high just one month ago. On February 19, the S&P 500 closed at 3,386 points, yet another record, and the coronavirus outbreak was largely confined to China, a mere side note in the constant stream of news we’re all exposed to. Just a couple of days later, as news of the virus spreading outside of China emerged, things took a sharp turn for the worse and markets started to tumble.
Four weeks later, the COVID-19 outbreak has turned into a full-fledged pandemic and large parts of Europe and the United States have come to a near standstill, wreaking havoc on the world economy and on stock markets across the globe. Since said February 19, the S&P 500 has dropped by almost 1,000 points and we’ve seen some of the worst single-day losses in U.S. stock market history.
As the following chart shows, the drop we’ve seen over the past weeks is already substantial but it’s not yet as deep as it was when markets hit rock bottom during the worst crises of the 21st century. Considering that we’re only a few weeks into the pandemic, and the economic fallout of the measures currently taken to stop it is yet unpredictable, the current crisis could well turn out to be as disruptive as the financial crisis of 2007-2009.
Coronavirus (COVID-19) disease pandemic- Statistics & Facts
By John Elflein, Research Expert Health & Pharmaceuticals
The world is currently experiencing a pandemic of an infectious disease called coronavirus, or COVID-19. COVID-19 is caused by the severe acute respiratory syndrome coronavirus 2 (SARS-COV-2) and is part of a large family of coronaviruses (CoV). Coronaviruses are transmitted from animals to people, with this particular strain of coronavirus thought to have originated from a seafood market in the city of Wuhan in China in late December of 2019. Symptoms of COVID-19 resemble that of the common cold, with those infected often experiencing fever, coughing, and shortness of breath. However, infection can lead to pneumonia, multi-organ failure, severe acute respiratory syndrome, and even death, in more severe cases. The elderly and those with preexisting chronic health conditions have accounted for the majority of deaths from COVID-19.
As of March 19, 2020, there had been cases of the disease in almost 160 countries or territories across 6 continents. By far, China has been the country most impacted by the disease. As of that time, there had been a total of 219,427 cases of COVID-19 worldwide, with 81,154 of these cases found in China. However, the total number of COVID-19 cases and deaths in the rest of the world has now overtaken the total number of cases and deaths in China. While the number of new cases in China has stabilized there have been an increasing number of new cases in many other countries and regions around the world. Every country in Europe has now reported at least one case with Italy, the hardest hit, the first European country to place all of its citizens on lockdown, restricting travel, closing schools, and closing public spaces and cancelling public events. Spain, France, and Germany have reported the most cases in Europe besides Italy, with these countries and many others now also closing schools, canceling public events, closing borders, and encouraging people to work from home. The United States has also begun to see a rising number of COVID-19 cases and deaths, prompting President Donald Trump to restrict travel into the United States for all foreign nationals from Europe for the the next 30 days, as of March 13. As of March 18, there had been a total of 7,038 cases in the United States, however, 6,493 of these cases were still under investigation. Every U.S. state has now reported at least one case of COVID-19, with the states of Washington, New York, and California reporting the highest number of cases. The virus outbreak is now on the minds of many Americans, dominating the media and politics, but even before the outbreak really hit the U.S., a survey from the end of January 2020 found that 73 percent of U.S. adults were “very concerned” or “somewhat concerned” about the COVID-19 outbreak. A more recent poll from the beginning of March, found that a majority of U.S. adults would be less likely to go to public places, such as to a concert or the movie theater, and less likely to use public transportation if the virus were to spread to their community. As of March 17, a total of 489 schools or school districts in the United States had closed as a response to the outbreak. As of March 19, 2020, there had been a total of 9,115 deaths due to the virus, with 3,249 of these deaths occurring in China. As of March 6, the World Health Organization (WHO) had estimated the crude mortality rate of COVID-19 to be between three and four percent, higher than that of season influenza, usually well below .1 percent, but lower than rates of other recent virus outbreaks. For example, the Middle East respiratory syndrome-related coronavirus (MERS-CoV), first reported in 2012, has a fatality rate of 34.4 percent, while severe acute respiratory syndrome-related coronavirus (SARS) has a rate of 9.6 percent. Multiple organizations around the world are currently working on a vaccine for COVID-19, but it is difficult to tell just how long it will take until one is available to the public. Until then, the World Health Organization (WHO) has encouraged those living in regions with infections to take basic precautionary measures such as regularly washing hands, covering the mouth and nose with a bent elbow when coughing and sneezing, and avoiding contact with people who may be infected. Aside from the obvious impacts on human health, the virus outbreak has also impacted international trade, international travel, national and international politics, and has been marked by misinformation and a number of xenophobic and racist attacks against Chinese people and other Asian nationalities. An increasing share of people worldwide believe COVID-19 poses a very high or high level of threat to their country and a growing percentage of people fear the outbreak will personally impact them financially. The impact of the pandemic on the global economy has already begun to show as a rising number of public events and flights have been cancelled, stocks have fallen, and film release dates pushed back. Nevertheless, the true impact of the pandemic is yet to be seen as case numbers continue to rise around the world.
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