GVSU economist shares what to expect as coronavirus disrupts global supply chains and stock market
The Dow Jones Industrial Average sank more than 1,000 points Monday as the spread of the coronavirus threatened wider damage to the global economy. The drop was the worst for the index in two years and wiped out its gains so far in 2020. WGVU spoke with one local economist about what to expect as the coronavirus impacts the global workforce and supply chains.
“Right now the market is reacting to fear. It's a fear that's been building now with the supply chain disruption which is now reaching about a month long and so it's going to have some real effects on corporate profits."
Paul Isely is Associate Dean in the Seidman College of Business at Grand Valley State University.
“I don't know enough about the virus and I don't think anybody knows enough about the virus to say how long those disruptions are going to last. And so, what we're really looking at is, if we see supply chain disruptions stay at the level they are now, or increase in the next 30 days, then we have to worry about the world economy.”
What does history tell you when these types of things happen?
“Well, I mean, historically when we look at these sorts of problems a lot of this is about uncertainty not knowing what's going to be happening, as opposed to the actual problems, and as that uncertainty becomes resolved things come back. So, you know, we're really looking here to see whether the supply chain starts to have more disruptions or those disruptions are now starting to be handled correctly.”
Isely explains if the virus spread begins to slow or the medical profession and researchers identify and produce a vaccine reducing its death rate… “All of those things will result in positive bumps if we're looking at it from the economy, and certainly a positive bump when we think about it from a humanitarian standpoint.”
Patrick Center, WGVU News.