On August 1, 2019, the stock market reversed a sharp earlier gain. After rising 1% that day the Dow Jones average plunged to a 1% loss when news hit the wire that President Trump ratcheted up the trade war with China. He announced a new round of tariffs on Chinese goods.
On the following Monday, August 5, 2019, the Dow Jones fall accelerated with a 2.9% drop and the Nasdaq dived to an even great loss of 3.5%. Investors wondered if this reversal of the booming stock market signaled the beginning of a recession. Since the start of the trade war with China in 2018, some pundits even speculated that the U.S. might be heading toward a 1929 style great depression
With the new tariffs, the financial community feared the trade war would escalate. They worried about significant damage to our agricultural industry and many other sectors that depended on China as a consumer of American goods and China as a link in the supply chain for countless industrial products. They anticipated a ripple effect throughout the industrial world and they worried that further sanctions or threats to China by President Trump might bring on another round of stock market selloffs.
What if at that time I told a group of business leaders and financial analysts that I am clairvoyant? What if I proceeded to describe what I see in my crystal ball, the events that will unfold over the following year.
I warn that if they are worried now they should brace themselves for far worse from what I see coming six months ahead.
A virus called COVID-19, I tell them, will start in China and spread across the world. And when it surges in the United States the US economy will shut down. Only essential services, food, and pharmaceutical outlets would be allowed to remain open. I add that I see the immediate collapse of many industries. The pandemic will quickly lead to more than 15 % unemployment, with the numbers expected to rise. I report that the airline, cruise line, and hotel industries will collapse. Airline passenger bookings will drop as much as 90 %. And all the travel industry will not expect any reasonable recovery for at least several years. Similar slaughter will sweep through the entire economy.
The prohibition of large crowd gatherings will close down the entertainment industry, including theaters and movie houses across the country. Virtually all colleges and schools will shut their doors; classes will switch to internet platforms for stay-at-home instruction. Sports stadiums will be shuttered. The opening of the baseball season will be postponed, as well as other sporting events. No one will know when or if when they will be able to resume. Some teams will begin planning for games without spectators.
By August 2020, 4.5 million Americans will have been infected, and more than 150,000 will have died. Infection rates will still be spiking in twenty-eight states.
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