On Tuesday, Feb. 11th, chairman Jerome Powell is going to Chapel Hill to face questions from the House Financial Services Committee regarding how the central bank will respond to new economic uncertainties resulting from the recent coronavirus outbreak in China. This has rekindled doubts about the global economy's prospects in 2020 as stock markets have paused after racing to records last month, and bond
yields have slid, reflecting uncertainty about whether the Fed might
adjust rates if the epidemic isn’t quickly contained. This will also give Powell the opportunity to update lawmakers on why the Fed is now considering changes to its inflation targeting framework. The target rate was set eight years ago at 2%, but recently, inflation has mostly undershot that goal.
Do you believe this virus outbreak will intensify the problems of the trade war with China? What industry is suffering the most from this epidemic?
5 comments:
Honestly, due to cheap labor present in china and india, companies such as Apple, Google, Banana Republic and so on are dependent on chinese labor productivity. The slowdown of economic activity has some serious implications on American industries and therefore, Powell's warning to expect likely economic effects in US is true.
It seems like problems with China have been the theme for at least the last 7 months. If it is not one issue, it is another and the most recent issue is obviously the coronavirus outbreak. I do see this halting some production of the American economy and especially American companies that rely heavily on Chinese labor. Look for Powell to lower interest rate targets once again soon .
The Coronavirus will most definitely impact the U.S. economy, production, and consumption as well. The U.S. needs to take action as soon as possible to increase spending in order to soften the blow to the economy due to the virus spread. American companies that rely on China are going to suffer the most, and lose money in the short-run.
I thoroughly agree with the comment left by Lucas. At this point the US economy has an upperhand against China due to the issues they are facing locally due to this outbreak. I believe the US economy will remain relatively stable for the next few months.
I agree with the above comments, as I think that the impacts of the coronavirus will continue to emanate in the U.S.. Companies in which the U.S. relies heavily on China for labor seem to be moving away from China quickly and I believe other companies will continue to follow suit.
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