Coronavirus effects could 'spill over to the rest of the global economy,' Fed warns in report to Congress
- A fast-spreading virus has killed hundreds in China and sickened thousands more, bringing activity in the second-largest economy to a near standstill.
- And the scope of its economic consequences may only grow, according to the Federal Reserve.
- In its latest monetary policy report to Congress on Friday, the central bank said possible spillover effects from the coronavirus have presented "a new risk to the outlook."
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A fast-spreading virus has killed hundreds in China and sickened thousands more, bringing activity in the second-largest economy to a near standstill. And the scope of its economic consequences may only grow, according to the Federal Reserve.
In its latest monetary policy report to Congress on Friday, the central bank said possible spillover effects from the coronavirus have presented "a new risk to the outlook."
"Data through early this year suggested that growth was steadying," the Fed said. "The recent emergence of the coronavirus, however, could lead to disruptions in China that spill over to the rest of the global economy."
As the coronavirus became increasingly deadly and widespread over the last month, authorities imposed a wave of new restrictions on travel and trade. Businesses and stores have also shuttered in an effort to contain the outbreak.
According to a poll by the Shanghai American Chamber of Commerce, the vast majority of US firms with operations in China expect the outbreak to reduce revenue this year. Nearly a quarter thought the impact would be significant, with revenue falling by at least 16%.
But the Fed noted that other risks have receded over the past year. While growth has moderated, the central bank said the overall economy was in a solid place and that recession risks have declined.
"Downside risks to the US outlook seem to have receded in the latter part of the year, as the conflicts over trade policy diminished somewhat, economic growth abroad showed signs of stabilizing, and financial conditions eased," the report said.
Asked on Friday whether he was concerned about the effects of the coronavirus on the global economy, Trump demurred.
"I think that China will do a very good job," he told reporters at the White House before departing on Marine One.