Weekly Economic Report
The masthead date is Friday the 13th, but we are actually writing on March 15th – the Ides of March. Both are ominous dates, and the coronavirus panic is palpable, as reflected by empty shelves all around the world. How long will the panic last? Will it cause a recession? We believe the evidence from Asia paints a far more optimistic picture than the consensus – which is dealing with the current spreading crisis in Europe and early missteps in the US. In Wuhan, the growth rate in cases peaked fourteen days after the travel bans were imposed just before New Year’s started on January 25th. In South Korea, case growth peaked 11 days after more aggressive testing was started following the discovery of patient 31 (who infected the Shincheonji church) – and just four days after the complete quarantine of Daegu. China’s first steps at restarting their economy appear to have gained traction this week, with the government reporting that 90% of state-owned operations and 60% of the private sector are back at work. Data on traffic congestion, port activity and anecdotal information from sources on the ground in China confirm that productive activity is returning to normal. Indeed, many cities appear to be operating above normal as they try to recoup the shortfall. However, traffic data on the weekend remains quite depressed, indicating the consumer is still very wary.