Monday, February 24, 2020

Coronavirus Is An Election Year Wild Card

A recurring joke among people dissatisfied with the choices in recent elections has been the “Sweet Meteor of Death.” The dark humor has become uncomfortably close to reality as the Coronavirus outbreak becomes a wild card in the 2020 elections.

Although the virus is still being studied, the Centers for Disease Control notes that the Coronavirus, officially dubbed “COVID-19” (Corona Virus Disease -2019),  is a disease that is easily transmitted through person-to-person contact. The virus is primarily spread through “respiratory droplets” disseminated by coughing and sneezing. A secondary form of transmission may be through touching objects where these droplets have landed and then touching your mouth, nose, or eyes.

Symptoms of COVID-19 can include fever, coughing, and shortness of breath. Symptoms are believed to appear in as little as two days after exposure but can take as long as 14 days to manifest. However, a recent statement by a Chinese provincial official suggests that the incubation period for the virus could be as long as 27 days.

The mortality rate for the disease is estimated to be about 2-3 percent. By way of comparison, the death rate for this year’s flu virus is about 0.1 percent. The mortality rate for SARS was 10 percent, MERS was 34 percent, and Ebola was 90 percent.

About two-thirds of the Coronavirus deaths are male and more than 80 percent were over 60-years-old. In about 75 percent of the fatal cases, there was another underlying illness such as cardiovascular disease. The median time between the first symptom to death was 14 days with a range of 6 to 41 days. Most fatalities have been in Wuhan where there were not enough resources to care for the influx of patients.   

At this point, the Coronavirus cases are concentrated in China. While the virus has appeared in numerous countries, including the US, most cases outside China are in isolation and are measured, at most, in the hundreds. At last count, Japan has 691 cases and South Korea has 602. The number of cases in Italy has surpassed 100 while Iran has reported 43 cases. There are 35 confirmed cases in the US. China has more than 77,000 cases.

The epidemic is growing at this point and represents a wild card for upcoming elections. While COVID-19 is not as lethal as some previous viruses, it spreads rapidly and could conceivably sweep the world in a pandemic.

During the Great Depression, it was said that “when America sneezes, the world catches cold.” In the 21st century, it may be China that gives the world economy a cold. China is one of the world’s largest economies and many global corporations have international supply lines that run through the country. Those supply lines may be interrupted by the disease and travel moratoriums. Already, many airlines have suspended flights to and from China and shipping companies such as Maersk are warning that decreased demand will impact their bottom lines.  

Obviously, the more the virus spreads, the larger the impact will be. Mohamed El-Erian, chief economic adviser to financial services company Allianz, told CNN, “They first paralyze the region of the virus outbreak. Then they gradually spread domestically, undermining internal trade, consumption, production and the movement of people. If the virus is still not contained, the process spreads further, including regionally and internationally by disrupting trade, supply chains, and travel.”

The flip side is that the outbreak may help some sectors of the market. Mark Zandi, chief economist for Moody’s Analytics, told MarketWatch that the epidemic could help suppress interest rates in a way that helps the housing market.

“The coronavirus is sort of a dark irony helping out housing,” Zandi said. “It’s keeping rates down as global investors come piling into the U.S. but it’s not hurting our economy to the point where it’s costing us jobs.”

Other industries that could see a boost from the crisis include medical suppliers and pharmaceutical companies. There is currently no antiviral treatment or vaccine for COVID-19, but in severe cases, patients are treated to support vital organ functions.

There are currently too many unknowns to say how the outbreak will affect either the economy or the election. China’s manufacturing losses may represent gains for other countries, including the US where manufacturing was in a mild recession throughout 2019. On the other hand, if trade is suspended between more countries, manufacturing demand may fall further. If the number of new cases slows, then Chinese factories may reopen and trade resume after a relatively short interruption.

At this point, the impact seems likely to grow, however. Stock markets today gave a hint of what may be to come with an 800-point drop in the Dow that may just be a tip of the iceberg. Given the fact that the US has had a bull market for the past 11 years when the business cycle is normally five to six years, we are long overdue for a correction. The Coronavirus may do what the trade war failed to do and tip both the world and American economies into a recession.

“The second-largest economy in the world is completely shut down. People aren’t totally pricing that in,” said market analyst Larry Benedict, who predicts a 10 to 15 percent market correction. “It seems like there’s much more to come.”

Politically, the effect is also unknown. Fears of the epidemic spreading to the US could build support for Trump’s brand of quasi-isolationism. Ironically, the outbreak began in China, the foil for President Trump’s economic populism. Trump supporters will argue that the crisis calls for a more self-contained economy and less dependence on international trade.

Conversely, concerns about public health could make health care a more prominent issue in the election. If Coronavirus concerns make health care reform a bigger issue, it would likely be to the opposition’s advantage since voters typically trust Democrats more on health issues. Republicans have been largely silent on health care reform since the abortive attempt to repeal or replace Obamacare in 2017.

If the epidemic sparks a recession, then the one unequivocal bright spot of Trump’s presidency will be gone. Among many voters, the strong economy is the only thing propping up their support of the president. As the Great Recession swept Barack Obama into power, a Coronavirus recession could elevate Bernie Sanders (or whoever the eventual Democratic nominee is) to the White House.

Another factor is how Coronavirus in the US could affect voter turnout. If current trends continue, a virus outbreak in the US would potentially affect the elderly disproportionately. Older voters also disproportionately support Donald Trump. If there is an epidemic that depresses turnout, it is possible that the Trump campaign will bear the brunt of the outbreak politically.

Yet another possibility is that a strong, competent reaction from the Trump Administration will provoke a rally-around-the-flag response from voters. In the past, unpopular presidents have redeemed themselves by rising to the occasion in a crisis.

The best way to ensure that the Coronavirus has a minimal effect on the election and the world in general is to take precautions to protect yourself and your family. The CDC recommends basic precautions such as covering your mouth and nose with a tissue when you cough or sneeze and then throwing the tissue away. Don’t touch your eyes, nose, or mouth and wash your hands frequently, especially after coughing, sneezing, or trips to the bathroom. Use soap and water and scrub for at least 20 seconds. Disinfect household surfaces with cleaners or wipes. Stay home when you are sick.

At this point, the CDC does not recommend face masks or respirators for people who are not sick with the virus. However, it is good practice to stay about six feet away from people who are coughing or sneezing to help prevent transmission of airborne particles. If you feel the need to invest in masks or respirators, however, there are many reasonably priced N95 respirators available online.

As an Eagle Scout and a survivor of floods, tornados, and a hurricane, I’ll add that being prepared for a disaster is always a good idea. Be ready for the worst-case scenario by maintaining a supply of food and water to last a couple of weeks. Power supplies for flashlights, radios, and cell phones are also good to stockpile in your emergency closet. So is a gun and ammunition.

Right now, there are more questions than answers about the Coronavirus outbreak. The good news is that the virus is not as lethal as other diseases while the bad news is that containment could still strain the economy. It will likely be months before the full extent of the epidemic is known, but it would be prudent to follow the old maxim which advises us to hope for the best while we prepare for the worst.

Originally published on The Resurgent

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