Virus-related shutdowns halt the U.S. economy

AUSTIN, TEXAS » It took 15 minutes for the coronavirus to wreck Shelley Hutchings’ carefully calculated financial plans.

Hutchings, a bartender and performer, had lined up gigs in advance of the South by Southwest film, music and technology festival, which draws hundreds of thousands of visitors to Austin each year. She’d expected to earn about $3,000 — enough to pay her taxes and buy a new sewing machine for a tailoring business she runs.

Then her phone started vibrating. Cancellations rolled in. In the face of the spreading coronavirus outbreak, Austin officials had called off the festival just as the first attendees had begun to arrive.

As Hutchings and hundreds of millions of Americans can attest, damage from the coronavirus has pummeled the U.S. economy with breathtaking speed and force. Hour by hour, day by day, the activities that households take part in and spend money on — plane trips, sporting events, movies, concerts, restaurant meals, shopping trips for clothes, furniture, appliances — are grinding to a halt.

And so, it seems, is the U.S. economy.

Now, forecasters can’t downgrade their outlook for the American economy fast enough.

“The expansion is under threat,” said Philipp Carlsson-szlezak, chief economist at the Boston Consulting Group. “There’s a very plausible risk this will amount to a recession.”

How did the picture darken so sharply, so quickly?

The speed of the virus’ spread appeared to surprise economists as it hopscotched to 117 countries, including the United States. And what health experts agree was the U.S. government’s fumbling early response to the crisis has undermined confidence. Anxieties have escalated.

U.S. officials are bracing for a dramatic acceleration of cases.

For most people, the coronavirus causes only mild or moderate symptoms, like fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia. The vast majority of people recover.

Yet as the gravity of the crisis had seeped into public consciousness, suddenly everyone is shrinking from public gatherings for fear of contracting the virus, and organizers can’t call off events fast enough.

The danger to the U.S. economy stems from a fundamental reality: Consumers drive roughly 70 percent of growth. When spending halts, the economy can’t grow.

“The economy is doomed to recession if the country stops working and takes the next 30 days off,” Chris Rupkey, chief economist at MUFG Union Bank, wrote in a research note this week.

Compounding the threat, the very measures that are required to contain the outbreak — quarantines, reduced travel, an avoidance of crowds and gatherings — are sure to stifle economic activity.

The resulting slowdown across the globe has undercut the price of oil, intensifying pressure on energy producers and likely reducing business investment.