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Lower gas prices and canceled events
among coronavirus impacts
DALLAS - It’s hard to pinpoint every way the new coronavirus has affected the national and global economy.
Some supplies are in higher demand, and social events, like the South by Southwest music festival, have been canceled.
But surprisingly, one of the secondary effects seems to benefit those behind the wheel.
“Well, I was noticing that gas is under $2,” driver Lexie said.
It’s a pleasant surprise for families about to hit the road for spring break.
“We save money. I like it,” driver Armando added.
But SMU economics professor Mike Davis said those savings are a domino effect of the COVID-19 outbreak that started in Wuhan, China.
“China is a huge consumer of imported oil, so when they quit buying oil, the price of oil goes down,” he explained.
As millions of people in china stay in place, work from home, and cancel social gatherings.
“When China suffers, and China’s clearly suffering, the global economy is going to suffer,” Davis added.
The transfer of goods from country to country has already been impacted.
BOSTON, MA - MARCH 5: A sign in the the Government Center T Station in Boston, created by the Massachusetts Department of Public Health, lists ways to stop the spread of germs on March 5, 2020, amid MBTA efforts to step up cleaning to defend against …
“If that supply chain is disrupted, that messes everything up. And we’re already seeing some shortages of some kinds of things,” Davis said.
But Davis said the question marks still surrounding the virus make it hard to predict long-term effects on the economy.
“I don’t know what the infection is going to do,” Davis said. “And also, we don’t know how people are going to react.”
Some are stocking up on supplies and canceling travel plans, while others are moving forward as normal.
“I hate it that people are suffering and that, you know, society as a whole is a little bit scared,” Lexie added.
Davis said that recent instability in the stock market indicates people and businesses are keeping their dollars close to the vest right now.
And he believes, when we have more certainty about COVID-19 or a vaccine is developed, we’ll have a clearer picture of which way the economy will turn.
“So I wish I could give you A, B, and C is going to happen. I can’t do that and nobody can,” he explained.
Davis recommends people think long-term about their money, and said if you had an investment strategy two weeks ago, that’s what you should stick with.
His belief, at this point, is that the coronavirus hasn’t changed everything.