What the new coronavirus means for the world economy

The stakes are high

A man wearing a facemask.
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The old adage was that when America sneezes, the world catches a cold, said James Areddy at The Wall Street Journal, but it's now China's health crisis that is "testing the entire global economic system." As the coronavirus outbreak spread this week, uncertainty "disrupted worldwide trade and supply chains" and forced factory closures by corporations like Tesla, Anheuser-Busch, and Apple, which makes many of its camera components in Wuhan, the city at the heart of the epidemic. The Shanghai market dropped 7.7 percent early this week as "pharmaceutical giants, financial institutions, and technology multinationals evacuated their expatriate workforces." Brands like Levi Strauss, McDonald's, and Starbucks have closed stores, and Hollywood will lose more than a billion dollars in Chinese ticket sales. Major airlines have cut off flight service to China, leading to a falloff in Chinese travelers, who spend "roughly $6,000 each" in the U.S. According to Goldman Sachs, the virus could reduce U.S. output by up to 0.5 percent in the first quarter, but "no one really knows."

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