What do you think? Leave a respectful comment.

How economic effects of global virus outbreak ripple beyond stock markets and travel

Monday was a tumultuous day in the global battle against coronavirus. Italy’s government banned travel nationwide after new spikes in infections and fatalities. Meanwhile, U.S. stocks had their worst day in over a decade. Special correspondent Christopher Livesay reports from Rome, and Judy Woodruff talks to Mark Zandi of Moody’s Analytics and Ben Mutzabaugh of air travel website The Points Guy.

Read the Full Transcript

  • Judy Woodruff:

    We return now to the coronavirus outbreak and to Italy, which was tonight put into lockdown, the entire country, by the government, 60 million people told to stay home.

    That came after authorities there announced today another spike in both the numbers of coronavirus cases and deaths.

    Over 9,100 people have contracted the disease; 463 are now dead from it.

    Special correspondent Christopher Livesay filed this report from Rome before tonight's countrywide lockdown took effect rooms.

  • Christopher Livesay:

    The streets outside Rome's coliseum have for days now fallen silent. As Italy battles the biggest coronavirus outbreak outside China, the few tourists that remain at hot spots like St. Peter's Square walk the streets wearing respiratory masks.

    Mariana Gomez, a visitor from Mexico, says many have given into the rising anxiety.

  • Mariana Gomez (through translator):

    I know it's a phenomenon that is spreading worldwide to all people. But what I have seen, in the few moments I have spent in Rome, is that there is a kind of psychosis here.

  • Christopher Livesay:

    It's a similar scene further north, in Milan, Italy's financial capital.

  • Lucia Navone (through translator):

    What is happening in my city is worrying me, and it is also saddening, because Milan is a lively city. And to see it like this today, it is almost a defeat for me.

  • Christopher Livesay:

    This after a record jump in deaths this weekend prompted the government to take drastic and aggressive steps to stop the virus' spread.

    On Sunday, authorities quarantined the entire northern region of Lombardy and nearby provinces, affecting about a quarter of Italy's population. But, today, authorities turned the entire country into a red zone.

    At an emergency news conference late today, Prime Minister Giuseppe Conte said movement across Italy would be restricted, expect for work or health reasons.

  • Giuseppe Conte (through translator):

    The right decision today is to stay at home. Our future and the future of Italy is in our hands. These hands have to be more responsible today than ever before.

  • Christopher Livesay:

    Before restrictions came into force this weekend, a mad dash of travelers to catch the final trains out of the northern region.

  • Roberto Pagliara (through translator):

    My decision was made in a hurry, so, I don't know. Let's say I am fleeing.

  • Christopher Livesay:

    But life elsewhere in Italy has also been upended by the virus. On Sunday, Pope Francis canceled his public appearances to avoid crowds from gathering, and delivered his Sunday blessings via videolink from inside the Vatican.

  • Pope Francis (through translator):

    It's a bit strange, this prayer today, with the pope caged in the library, but I see you and I am close to you.

  • Christopher Livesay:

    But not too close. He briefly waved from a window at the small crowd scattered across St. Peter's Square, where tens of thousands would normally gather.

    As for tourists, many popular destinations were no-go zones.

  • Laura Gomez (through translator):

    We say it's bad luck, because we arrived just yesterday, and the exact day that we planned to do all the sightseeing, we find that everything is closed.

  • Christopher Livesay:

    The Coliseum is just one of thousands of sites Italy has now closed across the country, as the contagion spreads and the death toll soars.

    The toll on tourism could amount to more than $8 billion in losses through the month of may. But not all locals here see a downside.

  • Ellen Polk:

    It's really fantastic because the city is so quiet. There's so little tourists.

  • Christopher Livesay:

    So are you afraid?

  • Ellen Polk:

    No, we are not afraid. We wash our hands before we eat. And that's about it. So, no, we're not really afraid.

  • Christopher Livesay:

    Instead, it's the toll taken by the restrictions on other rituals of life here. Yesterday's Inter Milan-Juventus soccer match, a huge rivalry here, was played to an empty house, after the government required sporting events to take place without fans.

    Today, the Italian Olympic Committee suspended all sports nationwide through next month. And as of this week, the watchword from elsewhere in Europe, mind the gap. Citizens must try to keep at least one meter of distance from one another in all public spaces.

    Meanwhile, across Italy's overcrowded prisons, frustration with the new measures turned violent, with riots over new restrictions on family visits aimed to curb the spread of the virus.

    For the "PBS NewsHour," I'm Christopher Livesay in Rome.

  • Judy Woodruff:

    And now we get some perspective on today's markets freefall and the widening economic fallout from the coronavirus outbreak.

    I'm joined by Mark Zandi, chief economist of Moody's Analytics. And to look at the challenges the airline industry is facing as people increasingly cancel travel plans, Ben Mutzabaugh, who follows the industry for The Points Guy, an air travel advice Web site.

    Welcome to you both.

    And, Mark Zandi, I want to start with you.

    How do you explain what happened today?

  • Mark Zandi:

    Well, I think we saw over the weekend what happened to a major economy, Italy, shut down Milan and Venice.

    And I think people realized, well, if it can happen there, it can happen in Boston and Orlando and Seattle. So I think that really spooked investors.

    And then on top of that, the Saudis and the Russians got into a battle over oil. And oil prices collapsed. And I think that spooked a lot of investors in energy stocks.

    And then, finally, I think there's growing concern about the policy response. You know, what is the Trump administration in Congress going to do to help address what's going on here?

    And, so far, investors aren't getting a good feeling about that. And I think that makes them nervous as well.

    So it was a confluence of things that came together, made it a really bad day.

  • Judy Woodruff:

    So you say really bad day, worse — they're saying the worst drop in, what, a decade on Wall Street.

    I was just reading. The S&P 500 has lost $5 trillion in value since its record highs just a few weeks ago.

  • Mark Zandi:


  • Judy Woodruff:

    It sounds pretty drastic.

  • Mark Zandi:

    Well, I think recession risks are high. I mean, I think, at this point, it's going to be pretty tough to avoid.

    You know, the virus is going to be very disruptive, travel, tourism, transportation. People are going to be stuck at home. They can't work. Then, of course, you have got the fear, and that's showing up in the stock prices and other financial markets.

    And, you know, the key here is going to be whether the administration and Congress can get it together fast enough to provide some help, because the Fed doesn't have a whole lot of room to maneuver. Interest rates are already pretty low.

  • Judy Woodruff:


  • Mark Zandi:

    So, you know, I think it's going to be pretty tough to avoid recession at this point.

  • Judy Woodruff:

    What do you mean pretty tough to avoid? I mean, are you saying it's likely?

  • Mark Zandi:

    Yes, I think it's more than likely.

    I mean, you know, we could get lucky and the virus peters out and it's not as big a deal as it does appear to be, or that the Congress and administration get together quickly, pass a piece of legislation that would provide a lot of support to the folks that are being hurt here and to the broader economy, and we might be able to navigate through.

    But barring those things, I think recession is likely.

  • Judy Woodruff:

    And from your — from where you sit, what does that mean for ordinary Americans?

  • Mark Zandi:

    Well, nothing good.

    Your retirement nest egg is going to be smaller. Wages are not going to increase. Some people aren't going to hold onto their jobs. They are going to lose their jobs. So, unemployment will start to rise.

    I don't think we should be thinking that this is something like the financial crisis, 10 percent unemployment, that we got 10 years ago. That's not what this is. And that's not what we're going to experience.

    But it's going to be a more typical garden variety recession, which means a lot of financial pain and suffering.

  • Judy Woodruff:

    Garden variety, but with a real human cost.

  • Mark Zandi:


  • Judy Woodruff:

    Well, let me turn now to you, Ben Mutzabaugh, somebody who spends a lot of time looking at the airlines.

    They're having a tough time at the moment.

  • Ben Mutzabaugh:

    They are having a tough time.

    And you don't have to — you can be sitting on your couch at home and know that the coronavirus and the related situation is bad for the airlines. And we're certainly seeing that.

    I think what has struck me with coronavirus is that things were fine for the airlines, until they weren't. We talked to some airline CEOs last week here at a conference in Washington. And they said demand in January was fine. Demand in February was fine, all while this was going on in China.

    And then all of a sudden, pretty much that first week of March, you saw things go from fine to all of a sudden people are either canceling plans or they have stopped booking, as this kind of fear or concern around the virus grows.

  • Judy Woodruff:

    How much is air travel off, passenger travel off right now?

  • Ben Mutzabaugh:

    I think we're still getting a sense of that. It's happened so quickly, that if you look at the latest numbers that are available, you don't see a whole lot, because it really just went off a cliff.

    I think once you get to the end of March, that's where you're going to see some really strong numbers. I think what is really concerning to me, in past recessions or downturns, what you have seen is, you have seen the airlines, they will adjust their schedules at the beginning of the next season, which is when they typically make adjustments to their schedules.

    But this drop-off has been so precipitous that we have seen some airlines just roll out cuts almost immediately or in short order, say, we're cutting 10 percent of domestic, 20 percent for international, which is what United has done.

    They're going to be temporary, presumably. But then we also have to wait to see what the rebound looks like, if — when it happens.

  • Judy Woodruff:

    Will these airlines survive this? Will they stay in business?

  • Ben Mutzabaugh:

    You know, here's where I can actually give you a little bit of good news.

    So, what is different now than in 2000 or even 2010, after the Great Recession, is, we have had all of these airline mergers, right? And I know you're going to have some critics say that — decry the loss of competition.

    The flip side of that is the U.S. airline industry has never been stronger financially. And where we might see some bankruptcies in Europe or Asia, some places, especially in China that have been harder-hit, unless this really has an extended lifespan that none of us expect, the airlines will — they will lose some money, they will lose some revenue, but I think all the big airlines today will be here standing strong six months from now, next year.

  • Judy Woodruff:

    But, in the meantime, who's affected?

    Obviously, the people who work for the airlines, but what about all those who — ripple effects from that?

  • Ben Mutzabaugh:

    Yes, this is really — the tentacles really get into everything, which is I guess is not a surprise when you're talking about travel.

    I mean, we have already seen airlines have hiring freezes, talking about unpaid leave, voluntary unpaid leave at this point. So that obviously affects airline workers. But you start to think about it. Conferences are being canceled as employers pull back travel and conferences. South by Southwest was canceled.

    Those are people who would normally be saving hotel rooms, taking Ubers, taking taxis, eating at restaurants. I mean, this really just kind of stretches into everything.

  • Judy Woodruff:

    And the entire travel — any part of that industry that is affected.


  • Ben Mutzabaugh:


    I mean, the way this ripples out is really just hard to enumerate. There's just such a big effect of it.

  • Judy Woodruff:

    And just — in just a few seconds, is there something the industry looks to Washington to do for help?

  • Ben Mutzabaugh:

    I think just some solid guidance.

    And they may, at some point, ask — I know the one thing we have seen is maybe waiving some taxes that they have to pay, some relief there.

    But I think that's all wait to — wait to see.

  • Judy Woodruff:

    All right, Ben Mutzabaugh and Mark Zandi, thank you both. We appreciate it.

  • Ben Mutzabaugh:

    Thank you.

Listen to this Segment