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Coronavirus Will Flatline the U.S. Economy in 2020, Warns Goldman Sachs

By Rich Smith - Feb 27, 2020 at 12:17PM

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The growth rate of new infections in China is slowing, but diagnoses of COVID-19 are picking up speed in other countries.

How bad has the COVID-19 coronavirus crisis become?

A few numbers may illustrate:

  • To date, there have been more than 82,000 confirmed cases of people being infected with SARS-CoV-2 (the actual coronavirus) in 50 countries 
  • More than 33,000 of these individuals have recovered from COVID-19 (the illness the virus causes) -- but more than 46,000 have not, and more than 8,000 patients remain in serious or critical condition.
  • More than 2,800 deaths have been reported.
Blue world map with China in red, word CORONAVIRUS and vectors leading away from China

Image source: Getty Images.

The news is not all grim though. More than a month into this crisis, numbers are getting clearer, and COVID-19 appears to have a mortality rate of only around 2% to 3% -- not good, certainly, but many other viruses are far more lethal.

The rate of new coronavirus infections also appears to be slowing in China. Only 450 new cases of COVID-19 were reported in China today, though it has the vast majority of cases -- about 78,500.

But there's more bad news, too.

COVID-19 is now spreading faster outside of China than it is within it. On Thursday, 505 new cases were reported in South Korea alone, 106 new cases in Iran, and 58 in Italy. And as the coronavirus inevitably expands from being primarily a China story into a global story, its effect on the global economy will spread.

Recognizing this, investment bank Goldman Sachs just cut it estimate for U.S. companies' profits growth in 2020 to precisely zero. "The severe decline in Chinese economic activity in the first quarter," Bloomberg quotes Goldman Sachs as saying, will reduce end-demand from Chinese customers for U.S. products. Simultaneously, supply-chain disruption will deny U.S. manufacturers the components they need. Throw in some general "elevated uncertainty" among consumers and producers alike, and U.S. corporate profit growth could flatline this year.  

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