San Diego Economy Feeling Squeeze From Coronavirus
Speaker 1: 00:00 Media reports say that a Marine at Miramar has tested positive for the Covance 19 Corona virus. The Marine is said to be in quarantine at his home off base. We'll bring you more information as it becomes available. Meanwhile, San Diego is nervously anticipating a substantial economic impact from the Corona virus outbreak. So far, conventions have been canceled, cruise lines suspended, and tourism is headed down. Add to that the plummeting stock market and national recession fears. And we may be wise to brace for tough economic times ahead. Joining me is university of San Diego economist Alan gin and Allen, welcome to the program. Speaker 2: 00:41 Thank you. Speaker 1: 00:43 So let's start with the stock market. We're apparently in bear market territory. What exactly does that mean? Speaker 2: 00:49 That means that the stock market is down to 20% from its recent high, so it hit all time high. It's hard to imagine, uh, imagine this, but it hit an all the time high just a little while ago, but it's down about 20% from there. And that is considered in a bear market territory. Speaker 1: 01:06 What are the factors that are freaking the market out? Speaker 2: 01:10 Well, I I think, uh, this week cause there were a couple, the primary one is this Corona virus situation that's having, uh, you know, disruptive impacts all over the world and threatens then to push the global economy into a recession. But this week we also had the plunging oil prices, uh, as a result of the dispute between OPEC and Russia. And so Saudi Arabia cranked up its production and that caused oil prices, the plunge, which could be good news for consumers that really hurt the oil companies, which are part of the index. Speaker 1: 01:39 Did wall street like the travel bands imposed by the president? Speaker 2: 01:42 Apparently not. Uh, you know, the stock market, the open down the at one point was down over 2000 points this morning. It's come back a little bit, but the reaction was not good to the president's address last night. Speaker 1: 01:55 So Allen closer to home San Diego is in the middle of our major convention season and several conventions are just not coming. They've canceled. What's the impact of that? Speaker 2: 02:06 I think it's going to have a huge impact then on the local economy. We're a big destination as far as tourists and conventions and meetings in are concerned and now these, uh, these meetings are, are being canceled. And so that threatens then to have a big impact in on our tourism industry. Speaker 1: 02:22 Should we expect more cancellations? Speaker 2: 02:25 I, I think, uh, I think we can, uh, you know, the situation is getting more serious. You know, the NBA has canceled the rest of their season. A NCAA tournament then can be played without sands. And so I think these big gatherings then, uh, are going to be restricted, uh, or voluntarily canceled. And I think that we're going to see a lot more meetings canceled here in San Diego. Speaker 1: 02:46 What about Comicon? Is that too far out to consider at this point? Speaker 2: 02:50 I think it is a, a little bit too, too far out that uh, if that is affected, man, that would be a, a major blow as far as I local economy of the end is concerned. Speaker 1: 02:58 California has Speaker 2: 03:00 announced new restrictions on gatherings with more than 250 people. And of course, as you said, the NBA has canceled its season. Now given the new state gathering restrictions, do you think the Padres baseball season is in jeopardy? I think that, uh, at least attendance at the Padres games are in jeopardy. You, the, uh, season is scheduled to start in a couple of weeks here. And so it could be, uh, that, that they're gonna play the games, uh, without, without fans in the seats. And so again, that that would have some sort of a negative impact in terms of the atmosphere as far as the games are concerned, but, but also from the impact around the businesses that, uh, that around the stadium, uh, uh, or, or, or the ballpark, uh, in, in the, in the East village, you know, restaurants, bars, things like that then would be negatively impacted by not having the crowd that would normally be, uh, you know, be there after the games. Speaker 1: 03:53 Now, yesterday the president announced a proposal to provide low interest loans to small businesses affected by the Corona virus. Here's what he said. Speaker 3: 04:03 Effective immediately, the SBA will begin providing economic loans in effected States and territories. These low interest loans will help small businesses overcome temporary economic disruptions caused by the virus. To this end, I am asking Congress to increase funding for this program by an additional $50 billion. Speaker 1: 04:25 Could these loans make a dent in offsetting some of the economic damage from the outbreak? Speaker 2: 04:31 It might help some businesses stay in operation, but again, these are loans that will eventually have to be paid back and won't make up then for the revenue that these organizations are lose that these companies lose. And some businesses might decide that, uh, you know, uh, it might be pointless to take out of this loan if a prospect or business then are, are, are not good in the foreseeable future. Speaker 1: 04:54 Are there any other types of programs that you think could limit the damage? Speaker 2: 04:59 I liked the proposal that was, uh, that was, uh, announced the day, uh, in Congress, uh, where they had increased the funding for things like sick leave for increases in terms of unemployment benefits, uh, in terms of, uh, food assistance because I think, uh, you know, the economy is going to be negatively affected. Some people, maybe a lot are gonna lose their jobs. And so I think there's a need dent to, to help people then who are going to lose their jobs as a result in of the, uh, epidemic. Speaker 1: 05:30 This is hard to think about, but are there any industries that actually could stand to benefit economically from the outbreak? Speaker 2: 05:37 Well, I think those industries that make the medical supplies then, uh, should benefit from this because there's going to be, you know, increased demands then for things like math and tests and other things that might, uh, might be needed then to, to deal with the situation. Speaker 1: 05:54 So Alan, finally, how do you see the economic of the Corona virus outbreak continuing to ripple through San Diego's economy in the short and the long term? Speaker 2: 06:04 Well, I, I think, uh, this could lead to some serious problems. We've already mentioned that San Diego is really dependent then on, uh, tourism, uh, for big part of its economy. And so any, any sort of, uh, impact, uh, in terms of people traveling and going to meetings and condenses, then will hurt us here in, in San Diego. The stock market drop has reduced people's wealth. And so that could adversely impact, uh, their, their, their spending. And, um, if there is, you know, some sort of widespread, you know, quarantine like they're doing an Italy where, where there's a lockdown, you know, that would then just basically stop economic activity. Uh, you know, people would not be able to go to the movies or, or, or shop or things like that. And a lot of businesses, uh, Berkeley, small ones then could be hurt by that. Speaker 1: 06:54 I've been speaking with university of San Diego economist Alan, Jen Allen. Thank you. Speaker 2: 06:59 Thank you.