Here’s How Much the Coronavirus Is Costing the World (So Far)
Stocks are plunging, vacations are being canceled, and that’s just the beginning.
The other devastating effects of the coronavirus
The coronavirus isn’t just costing lives; it’s also costing livelihoods. As the death toll rises around the world and the disease spreads throughout the United States, it could cost the global economy trillions in lost income, stock-market drops, tourism dollars, and more. So, just how much money will it cost us? Early estimates from Bloomberg put it at $2.7 trillion—but that was before coronavirus was declared a pandemic, all of Italy went on lockdown, and the United States started canceling everything. This crisis will also have some surprising repercussions in seemingly unrelated ways, including the major way it’s already affecting construction. Here’s what this virus is doing to us financially—and has the potential to do as the crisis worsens.
The Chinese economy is virtually paralyzed
Kevin Frayer/Getty Images
This will have a deep and profound effect on the global economy, says Tenpao Lee, PhD, a professor of economics at Niagara University. “With our global economy, and the fact that China makes up about 16 percent of that, the economic ripple effects will be felt around the world,” Lee explains. “The global supply network has been broken, and a significant portion of the global economy is halting.” Lee believes that a global recession—affecting developed and developing countries—is inevitable in the first two quarters of 2020. You might find yourself in a less painful spot if you have one of these 12 recession-proof jobs that will survive the next economic downturn.
Stocks are plummeting
Spencer Platt/Getty Images
Global equity markets lost trillions in value during the week of February 24, says Andrew Schrage, CEO and co-founder of Money Crashers. “Much of that value will return as the initial panic subsides and central banks take emergency action to assuage investors’ fears, but that’s not much comfort for weak-kneed investors gaping at their shrunken 401ks,” he says. That panic was nowhere near subsiding in mid-March, as the epidemic turned into a pandemic and the stock market continued to fall. In fact, on March 12, the market experienced a single-day 10 percent loss, the DOW’s worst day since 1987’s infamous Black Monday, pushing it into bear-market territory.
This isn’t just bad for your 401k but for the economy as a whole. The Federal Reserve is attempting to infuse the market with an estimated $1.5 trillion of life support to stanch the bleeding and keep us out of a global recession, but will it be enough? If not, this will turn into a longer-lasting problem. As CNN Business explains: “If those markets shut down, like they did in 2008, banks would stop lending to each other and cut off capital provided to Corporate America. In other words, a health crisis would turn into a credit one.” Global crisis or not, these are 17 things you need to know before investing in stocks.
Airlines and hotels are suffering
Spencer Platt/Getty Images
The travel and logistics sectors have been the hardest hit, Schrage says. In particular, airlines and transportation companies have lost many billions in market value since the beginning of the year. “The shock is worse than anything that’s happened since 9/11,” Schrage says. “Depending on the extent and duration of the pandemic, the long-term impact could wind up being worse than 9/11.”
Early estimates put the cost to the U.S. travel and tourism industry at $24 billion and the cost to airlines at $113 billion. Globally, another industry expert estimated around $820 billion in losses. Those figures, however, came out before President Trump’s partial European travel ban and the announcement from major tourist attractions that they would be closing for the foreseeable future. Speaking of which, here’s how to get a refund if a world crisis forces you to cancel a trip.
Cruises have been docked
Joe Raedle/Getty Images
With cruise lines losing money as their ships have been quarantined due to coronavirus outbreaks and fewer people wanting to travel by ship during this crisis, some are halting operations altogether. Princess Cruises, which has 18 ships and usually serves more than 500,000 people a day, suspended travel for 60 days. This caused parent company Carnival’s shares to drop by another 31 percent; they are down 70.6 percent since January 1. Disney is also docking its cruise ships for the rest of March. When the threat has finally passed, the industry will likely offer majorly discounted trips as a way to get passengers back on board. In case you were wondering, this is what happens if you get sick on a cruise ship.
People will lose their jobs
Omar Marques/Getty Images
When businesses are shuttered, they aren’t making money…which means there isn’t any money (or, at least, there’s less of it) to pay employees. As a result, there will be layoffs. Small businesses will also be particularly susceptible to the effects of people staying home, away from crowds and away from businesses, and some will be forced to close for good. As the Independent writes, “Coronavirus’s economic danger is exponentially greater than its health risks to the public. If the virus does directly affect your life, it is most likely to be through stopping you going to work, forcing your employer to make you redundant, or bankrupting your business.”
The gig economy will also pose problems for many workers, as they won’t be hired during this virtual shutdown—and therefore won’t be getting paychecks. According to Deutsche Bank, 15 million workers, including independent contractors, on-call workers, and temp-help agency workers in a wide range of industries, are at particular risk.
Sickness may lead to personal bankruptcies
Cindy Ord/Getty Images
With many people living paycheck to paycheck in this country, things are already precarious. Add in potential layoffs, child-care issues, and costly medical bills, and it’s a recipe for disaster. According to a recent Healthcare.com and YouGov poll, nearly half of insured Americans worry about being able to afford the costs of treatment if they come down with coronavirus. And that’s among insured adults. While the exact costs still aren’t clear, patients have received bills of more than $3,000 just for the tests. And being treated at an out-of-network facility—say, if intensive care is needed or your in-network hospital is at capacity—could run patients in the tens of thousands of dollars. Here’s what really happens when you file for bankruptcy.
New York City grinds to a halt
Gary Hershorn/Getty Images
While this is happening in a number of major cities in an attempt to slow the rate of infection, it is perhaps nowhere near as shocking as it is in the city that never sleeps. Museums are closed, restaurants are empty, and Broadway’s lights are off. While it may be hard to understand just how much revenue may be lost, consider this: In 2019, when a power failure caused Broadway to go dark for five hours, it cost producers $3.5 million in revenue. Now multiply that by 30-plus days for some seriously staggering figures. Of course, that doesn’t take into account the lost wages for actors, production staff, and associated businesses that benefit from Broadway. The curtain has also been lowered at the Met and Lincoln Center.
Sports are benched
Ed Zurga/Getty Images
It started with March Madness and quickly spiraled into the NBA, the NHL, the MLB, and U.S. and European soccer. All of your favorite sporting events have either been canceled outright or suspended for at least the next month. Here’s a little perspective from a financial standpoint: According to Fox Business, the NCAA raked in an estimated $933 million during 2019’s March Madness when factoring in media rights, ticket sales, and sponsorships. And that’s just for one college-sports championship.
In the meantime, check out some interesting sports facts, like why Americans say “soccer” instead of “football.”
Disney has closed
David McNew/Getty Images
The happiest place on Earth is no more…at least for now. Disney World and Disneyland have only closed a handful of times in their entire histories due to major world or weather events, and now, they will be closed through the end of March. How significant is this? In early February, Disney warned that the closure of its parks in China alone could equal a $280 million loss in the current quarter. Disney has said that it will pay its cast members during the closure, but this doesn’t account for the many other people employed by the parks.
When planning future trips, here’s something to keep in mind: This is when travel insurance is worth it—and when it isn’t.