Updated at 4:10 p.m. ET
As odds of a global recession rise, governments and central banks around the world are racing to fend off the economic damage from the spread of the coronavirus.
The toll has already landed hard on jittery financial markets. Stocks continued to sell off on Thursday as the Dow Jones Industrial Average plunged 969 points, or about 3.6%, as investors fled stocks. Companies have shut factories, canceled conferences and drastically scaled back employee travel.
In countries where the virus is most lethal, such as China and northern Italy, business activity has all but ground to a halt, with entire cities under quarantine and whole industries forced to lay off workers.
But in a global economy, even countries that have been relatively unscathed by the virus so far, such as the United States, face growing risks from the "still-evolving corrosive shock from the virus," says Bob Schwartz, senior economist at Oxford Economics.
How well the U.S. economy holds up "remains to be seen," he adds. "The outcome will probably determine if the economy stays out of a recession this year."
On Tuesday, the Federal Reserve unanimously agreed to an emergency interest rate cut of half a percentage point in an effort to keep the wobbly economy on track. Central banks in Japan and the United Kingdom are also signaling they're willing to cut rates.
Meanwhile, the U.S. Senate on Thursday gave final passage to a roughly $8 billion spending package to provide medical supplies in hard-hit areas and pay for vaccine research. President Trump has said he will sign the bill.
Despite such measures, many economists now say growth is likely to slow considerably this year — if not contract altogether.
Goldman Sachs projected on Sunday that because of the coronavirus, the U.S. economy would grow by an anemic 0.9% during the first three months of 2020 and would flatline during the second quarter.
The epidemic has already cut into growth this year and may slow the global economy even further, depending on how long it lasts, the International Monetary Fund said this week.
The uncertain outlook has sent the stock market onto a tumultuous roller-coaster ride not seen since the 2008 financial crisis, with turbulent drops followed by wild swings upward.
Even the Fed's interest rate cut has done little to ease the market's volatility. After Tuesday's 1,300-point drop in the Dow, stocks soared again Wednesday. But stock indexes were down sharply on Thursday.
The tumult in the U.S. economy still pales in comparison to the damage being felt in other countries. In China, auto sales cratered 80% last month, while a plunge in tourism is expected to push Italy and perhaps France into a recession.
Still, the list of U.S. companies that say they're feeling the epidemic's impact grows longer every day.
Procter & Gamble and Ralph Lauren are among numerous companies warning that the epidemic will hurt sales because shoppers are staying home, especially in the booming consumer market of China.
Others, such as Medtronic, Microsoft and Best Buy, say the virus has disrupted their supply chains in Asia and forced them to shut down production, at least temporarily.
Even when factories are reopened, many companies in China report difficulty finding enough workers to staff them, according to a survey of manufacturers by the American Chamber of Commerce in Shanghai.
Apple has warned that it won't meet its sales estimates for the current quarter, in part because its major suppliers, including Foxconn and Flex, remain understaffed.
The industries hardest hit have been tourism and travel, with many airlines canceling flights and companies such as JPMorgan Chase banning all but essential employee travel.
The U.S. Travel Association predicts that international travel to the United States will fall by 6% over the next three months.
"There is a lot of uncertainty around coronavirus, and it is pretty clear that it is having an effect on travel demand — not just from China, and not just internationally, but for domestic business and leisure travel as well," the association's president, Roger Dow, said in a statement.
As more and more companies feel the pain of the epidemic, the odds of a prolonged downturn grow.
"It is not just spending on restaurants and travel that is suffering, but also investment by businesses while they wait for the uncertainty to be resolved," Eswar Prasad, a senior fellow at the Brookings Institution, wrote in the New York Times this weekend. "This will have long-term effects on growth even if the outbreak proves short-lived."
But epidemics like this one don't come along very often, and economists don't have any good models to figure out what might happen. For now, the picture remains murky, says Bernard Baumohl, chief global economist at the Economic Outlook Group.
"No one can say with much confidence how much harm the virus will ultimately do to people or damage to the global economy," he says.
ARI SHAPIRO, HOST:
On Wall Street today stocks took another stomach-turning plunge. Many economists say the odds of a recession are going up even in the United States. We're joined now by NPR's Jim Zarroli.
JIM ZARROLI, BYLINE: Hello, Ari.
SHAPIRO: Investors seem to be very anxious about what the coronavirus might mean for the economy. Are they right to be worried?
ZARROLI: Yeah, there's a lot to be concerned about. I mean, right now you're seeing parts of China and Italy and South Korea where business activity has just ground to a halt. You're seeing factories close. Over the weekend, Samsung had to shut down a plant and disinfect it in South Korea because a single worker had been exposed. And then even when the factories reopened, they sometimes can't get all the workers they need.
I spoke today with Gregory Daco of Oxford Economics. He says the global supply chains are so intertwined right now that what happens in China or South Korea ends up hurting companies all over the world.
GREGORY DACO: They might not get their usual products that they use to produce a car or to produce an oven or a washing machine. So when they're assembling the different parts, if there are shortages of components, they might not be able to produce the final product.
ZARROLI: And then he says even if the companies can turn out a washing machine or a car, there's a question about who will buy them because many companies, like Microsoft and Ralph Lauren, say they have seen a big drop-off in sales, especially in China, which is an enormous consumer market.
SHAPIRO: And so how likely is the possibility of a recession?
ZARROLI: You know, it is hard to say now because we don't have a lot of data yet. What we have is a lot of anecdotal information. I think most economists are saying they think the odds of a recession in the U.S. are so low. The fundamentals of the economy - until now, at least - have been very strong, but they are under assault. You know, every major company, like Microsoft, like JPMorgan Chase, is cutting back on travel, so that means meetings aren't happening. It means, you know, deals aren't getting done. Airlines are cutting flights to some countries. There's a lot of concern that, you know, if this continues, people are going to stop going to stores and shopping.
SHAPIRO: Are there things that governments around the world can do to prevent a recession?
ZARROLI: Well, we have already seen the Federal Reserve cut interest rates by a half percentage point this week. That was a really unusual emergency measure.
SHAPIRO: But on that day, the stock market dropped.
ZARROLI: Yeah. Right. Right. And I think that suggests that maybe the Fed - what the Fed does is is not enough and that more is needed. Now, we've seen central banks in Japan and the U.K. say they're open to cutting rates. It's - you know, they're trying to add a little confidence to the economy. It means companies can borrow money more cheaply. But I talked today with Eswar Prasad of the Brookings Institution, and he says, you know, when there's this much anxiety out there, the Fed can't do that trick by itself.
ESWAR PRASAD: Just because there is cheaper money available, firms are not going to go out and invest given all the uncertainty about future economic prospects. And consumers are unlikely to be able to go out and spend with any degree of confidence.
ZARROLI: And Prasad says the Federal Government has to play a role, too - a big role. That is already happening to some extent. Congress has just passed an $8 billion spending measure which is meant to fight the epidemic. And some of the countries in Asia, especially, like, China and Japan - they're spending money to try to prop up their economies, and they're doing it because they're really scared about the consequence of the virus and what it will do to their economies.
SHAPIRO: That's NPR's Jim Zarroli.
Thank you, Jim.
ZARROLI: You're welcome.
(SOUNDBITE OF KELPE'S "POLYMAR E") Transcript provided by NPR, Copyright NPR.