U.S. Economic Effects Of The Coronavirus Travel Ban
MICHEL MARTIN, HOST:
Let's turn now to the economic impact of the coronavirus outbreak. And we're not just talking about the stock market here. Today, for example, we're hearing that the Trump administration is increasing its restrictions on travel from Europe to include Ireland and the United Kingdom now. And at today's White House briefing, President Trump said he's considering restrictions on domestic travel as well - two additional steps intended to help slow down the spread of the coronavirus but which could also come with a big price tag for the U.S. economy. NPR's Scott Horsley is with us now to talk about that.
SCOTT HORSLEY, BYLINE: Good evening.
MARTIN: How are these latest moves by the administration likely to affect the economy?
HORSLEY: Well, airlines and hotels had already taken a big hit. And the new limits on trans-Atlantic travel will just add to that. This week, Delta announced that it is cutting its flight schedule by 40%. It's parking some 300 airplanes because of diminished demand for travel. Think of all the sporting events that have been canceled, the Broadway shows shut down - and then just everyday activities like going out to the coffee shop.
When this epidemic began in China, Starbucks announced that more than half its stores in that country were shut down. Now we've got the coronavirus in Starbucks' home state of Washington. Americans are still spending money on some things - bleach, hand sanitizer, toilet paper if they can find it. I also noticed liquor sales are way up in certain parts of the country. But overall spending is going to suffer. And because consumer spending is such a big part of the economy, that's a major slowdown.
MARTIN: So let's talk a minute about the stock market. It's been on a downward slide as the pandemic has spread. But it did bounce back a bit yesterday. Do we know why?
HORSLEY: It seems as if investors were encouraged that the federal government is finally taking some steps both to address the public health threat and also to cushion the economic blow. President Trump declared this national emergency, which frees up money and gives more flexibility to the health care system to fight the virus. And then you have the House passing this big bill that's supposed to help people who are unable to work. It offers the sick leave that Domenico talked about, expanded unemployment insurance, additional food stamps and other nutritional aid.
There were really intense negotiations this week between the House speaker, Nancy Pelosi, and the Treasury secretary over the details of that bill. President Trump was disappointed because it doesn't include his signature payroll tax cut. But, you know, the president did tweet last night that he will support the bill, and the Senate's expected to take it up this week.
Yesterday's rally in the stock market did make up for some of the big losses we saw on Thursday, which was the market's worst day in more than 30 years. But stocks have still lost a lot of ground over the last month or so.
MARTIN: As anybody would know who's checked their portfolio...
MARTIN: ...Which maybe you should avoid doing if you're trying to avoid stress. But President Trump has often criticized the Federal Reserve for not cutting interest rates fast or far enough, and he did so again today. Let's just play a little bit of that.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT DONALD TRUMP: No, I'm not happy with the Fed because I think that they are following that lead, and we should be leading. I'm not happy because if you look at the central banks of other - you know, other central banks, largely, they're lower than us - their rate.
MARTIN: Well, the Fed's rate-setting committee is scheduled to meet this coming week. What are they expected to do?
HORSLEY: The Fed is widely expected to cut interest rates again, possibly by as much as a full percentage point, which would basically take their benchmark rate down to close to zero. None of the economists I talked to, though, think that's really going to do a lot to boost the economy in the short run. And if you're stuck at home, if your business is closed, it doesn't matter how low the interest rate goes. You're not going to be out spending money. So the immediate benefits of this are marginal. But it does look as if the president's going to get the lower rates he's been jawboning about.
The other thing the Fed is doing is pumping huge sums of cash into the banking system just to keep the gears from seizing up, which would make a difficult economic situation even worse.
MARTIN: So, Scott, I don't give you - I don't have a lot of time for you to answer this, but Anthony Fauci, one of the top doctors on the president's coronavirus task force, warned yesterday that even if all these public health efforts are successful in addressing this, we're still likely to be dealing with this for eight or nine weeks - maybe more. Only about 30 seconds, but what's next?
HORSLEY: Yeah. If Congress were to slow or stop for anything like that amount of time, you would see more financial hardship. One thing that's being talked about is just to put more money out there for workers and consumers who are adversely affected. That's something House Democrats are talking about. Speaker Pelosi did say just as soon as the ink was dry on the bill they passed yesterday, she's going to be working on another bill to protect health and economic security.
MARTIN: That was NPR's Scott Horsley.
Scott, thank you so much.
HORSLEY: You're very welcome. Transcript provided by NPR, Copyright NPR.