According to expert economist Stephen Moore, Americans can expect the U.S. economy to “roar back to life” once the coronavirus has been contained. In an interview with New York radio host John Catsimatidis on Sunday, the Heritage Foundation economist said that once fears over COVID-19’s potential were tamped down, the economy would resume its extraordinary growth pattern.
“Once the confidence and the health of the American people is restored, then the market and the real economy will burst back to life,” Moore predicted.
Moore’s remarks will either seem comforting or wildly out of touch, depending on what happens to the global economy over the next few days. Certainly, things look extremely shaky as of Monday morning. The S&P started the day with a 7% drop, triggering a temporary halt to trading. While the market seemed to settle somewhat after trading resumed, it hasn’t stopped the Dow from sinking more than 2,000 points – a decline that owes as much to an oil price war in the Middle East as it does to the coronavirus.
“Saudi Arabia and Russia are arguing over the price and flow of oil. That, and the Fake News, is the reason for the market drop,” President Trump wrote on Twitter.
On the radio Sunday, Moore said that Americans should not worry about a recession.
“I just see this as a real short-term pause in the growth that Trump has created,” Moore said. “Once we get this thing contained the economy will roar back to life.”
The unfortunate thing about something like the coronavirus, though, is that it weakens the overall market so that one wrong move in another sector can set off a full-fledged buyoff panic. That seems to be exactly what happened over the weekend as Saudi Arabia decided to punish Russia for not joining OPEC in a production slowdown. In early trading on Monday, crude oil lost nearly a quarter of its value, a plunge that hasn’t been seen in nearly three decades. The impact on the share prices of companies that depend on fossil fuels was inevitable and predictable.
Now is the time when investors will be looking to see if the fundamentals of the economy are still sound, which is the only thing that can trigger a massive market recovery. But with tremendous uncertainty still surrounding this virus, that comeback may not happen for a while still. Hopefully, Russia and Saudi Arabia can quickly resolve their differences, and hopefully, this coronavirus outbreak turns out to be more sizzle than steak.
Otherwise, we could be looking at a rough spring.