The Coronavirus' Impact On Financial Markets And The Economy
DAVID GREENE, HOST:
We are watching Wall Street this morning. The Dow opened strong and is up more than 600 points, though the global economy has been shaken because of concerns over coronavirus. The outbreak has roiled the stock market. And then oil entered the mix on Monday when a dispute between Saudi Arabia and Russia caused panic. Yesterday was actually Wall Street's worst day in more than a decade. After the markets closed, President Trump said he is going to ask Congress for help.
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PRESIDENT DONALD TRUMP: We're going to be meeting with House Republicans, Mitch McConnell, everybody and discussing a possible payroll tax cut or relief - substantial relief, very substantial relief. That's a big number.
GREENE: We have NPR chief economics correspondent Scott Horsley with us this morning. Hi, Scott.
SCOTT HORSLEY, BYLINE: Good morning, David.
GREENE: Listening to the president there - a big number, substantial relief. Can you help us understand exactly what he's talking about?
HORSLEY: Not exactly. He did not offer a lot of specifics during that hastily arranged statement to the news media after the market closed yesterday. He did promise that he'd have more to say today after he consults with lawmakers. You heard him float the idea of a payroll tax cut there. He has also talked about providing some targeted help for industries such as airlines and cruise ships that have been, obviously, hard-hit by the coronavirus outbreak.
He also mentioned loans for small businesses that have had their operations disrupted or may have their operations disrupted in the weeks and months to come. And he also mentioned some help for workers who don't have sick leave. That's important because you don't want people who do fall ill to feel economic pressure to keep going to work and possibly spreading the virus.
GREENE: I was interested that he said, you know, he's going to consult with lawmakers, as you said. But he mentioned House Republicans and Mitch McConnell. What about Democrats? I mean, doesn't he need both sides to make some big moves like this to help the economy?
HORSLEY: He does. And he - it was conspicuously absent (laughter), the - with no mention of House Democrats, who do have the majority and would have to sign off on something like a payroll tax cut. Now, there are certain things that the administration might be able to do on its own using existing authorities - maybe some of those small business loans, for example. But it is going to take congressional action, and that means some buy-in from Democrats in the House.
It does seem as if both the White House and Congress have now come to agreement that some kind of economic response is needed to the threat posed by the coronavirus. But they don't necessarily see eye to eye on what that action by the government ought to be.
GREENE: Well, as I mentioned, I mean, a historically bad day on Wall Street, and you had Treasury Secretary Steven Mnuchin speaking yesterday, briefing reporters about the coronavirus and trying to reassure investors. Let's listen here.
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STEVEN MNUCHIN: We will provide whatever tools we need that the economy will be in very good shape a year from now. This is not like the financial crisis where we don't know the end in sight. This is about providing proper tools and liquidity to get through the next few months.
GREENE: Sounds reassuring, sounds optimistic. I mean, what do you make of that?
HORSLEY: Yeah. This is the kind of reassuring message you want to hear from the treasury secretary at a time like this. Of course, Steven Mnuchin is also the fellow who continues to insist to this day that the GOP tax cut is going to pay for itself. So he may have squandered some credibility here. He is right that this is not like the financial crisis. This is a different kind of economic threat.
And the decline of new coronavirus cases in China does suggest there is an opportunity for the government to slow or even stop the outbreak. But, you know, Europe and the United States are still in the early stages of that curve. So there's still just a lot of uncertainty about what the economic consequences are going to be.
GREENE: Well, and people feel uncertain, not just about investments - right? - but, I mean, even that their paychecks - I mean, whether, if businesses really suffer, they could be laid off in something like this.
HORSLEY: Yes. And, you know, House Speaker Nancy Pelosi, Democrat, took a swipe at the president's proposal yesterday. She said it seemed as if the White House was trying to prop up the Dow Jones more than it was the Jones family. Democrats are skeptical of the idea of a payroll tax cut. Although that is something that was done in the recovery era from the Great Recession. It's fairly fast. It's fairly easy.
But it is not - it doesn't help people who, for example, are not on a payroll. The idea of helping people who don't have sick leave so that they don't feel the need to go to work does seem to be one area of potential agreement between the White House and Democrats on the Hill.
GREENE: Could all this be taking us closer to a recession?
HORSLEY: The risks of a recession have certainly increased. Before the coronavirus outbreak, most economists were not predicting a recession in the U.S. in 2020. And now there are some prominent forecasters who say it's more likely than not. But there's still a lot of uncertainty. And the wild swings you see in the stock market just reflect the uncertainty investors have as they try to suss out what path this is going to take.
GREENE: Scott Horsley, NPR's chief economics correspondent. Scott, thanks so much.
HORSLEY: You're very welcome.
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