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This past week has been one where all things global feel uncomfortably local. There is no inoculation against the spread of bad news as it rolls in from China, Japan, and as close as the West Coast.
I agree with Rick Casey, who wrote last week that San Antonio should take pride in the city’s role in responding to the COVID-19, or novel coronavirus, as more than 100 people remain quarantined at Joint Base San Antonio-Lackland. Local management of the nine confirmed cases seems well-planned and coordinated. The Rivard Report‘s Health Reporter Roseanna Garza has relied on facts rather than fear in covering the developing story.
Yet the World Health Organization’s Friday warning that there is now a “very high” risk of pandemic is to be taken seriously. The first U.S. death was reported one day later. While we await to see the virus’ impact on public health, we can already measure the economic fallout.
What a different world it might be today, I found myself thinking, if Steve Jobs had chosen Mexico and Central America instead of China in search of cheap labor to assemble Apple smartphones and other game-changing products.
Consumers would be paying more for the devices, but the supply chain would not reach around the globe, and the trade imbalance with China would be smaller. More manufacturing and assembly jobs south of the border would have kept many would-be migrants gainfully employed at home. We would be on better terms with our neighbors and not spending billions of dollars building a wall across South Texas.
We would have sent a message to a Chinese regime that “reeducates” ethnic minorities in concentration camps and denies its own citizens basic freedoms taken for granted in the West.
Apple is not alone, of course. Dozens of the most important U.S. companies rely on China for cheap manufacturing and assembly labor, so the COVID-19 outbreak is not only a public health crisis and potential pandemic. It’s the cause of an economic temblor that has shaken and rattled world markets and, if it continues to spread beyond 60 countries at the current count, it could trigger a global recession.
The financial pain has already hit home for anyone with a retirement account, or dependent on investment income. For the fortunate few who are wealthy and have access to cash, it will be a bottomed-out buyer’s market, sooner or later. For the rest of us, the promise of continuing prosperity in 2020 has dimmed, and the memories of 2008 suddenly seem more vivid.
The thousands of nonprofits that serve San Antonio and the region, including the Rivard Report, will likely have to brace for a downturn in foundation and philanthropic giving. Charitable investment portfolios locally are collectively recording paper losses in the tens of millions of dollars; that will mean diminished disbursements. Those nonprofits form the safety net in the U.S. city with the highest rate of citizens living in poverty of any top 25 metro.
If governments succeed in corralling COVID-19 and limiting its spread, markets could begin to recover, although many economists say the correction was long overdue after more than a decade of unbridled growth. The U.S. government and many highly leveraged U.S. companies have been on a spending spree. If profits dry up, expect that debt to suddenly become a big problem.
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I paid less than $2 a gallon for gasoline this week, but the drop in prices welcomed by consumers at the pump also means that production in Texas, especially the shale fields of the Permian Basin, could become unprofitable and lead to lost jobs. Airlines, cruise ships, and even the importer of Corona beer are feeling very bearish.
COVID-19 will now become an issue in the presidential campaign, as it should. The U.S. economy remains “fundamentally sound,” according to a Friday statement by Larry Kudlow, the director of the White House’s National Economic Council. President Donald Trump also downplayed the past week’s economic damage and encouraged people to invest in stocks. On Friday he defended his administration’s dismantling of the government’s emergency response management team over the past three years, and billions of dollars in cuts to related budgets, including at the Centers for Disease Control and Prevention.
Given the slashing of federal resources, expect confidence in the administration’s response to the outbreak to falter if things worsen. Is the United States truly prepared should the contagion spread? That’s a question none of us want to see put to the test.