Coming into 2020, there was a strong sense that global economic fortunes were poised to improve. According to the International Monetary Fund (IMF), the global economy expanded just 2.9 percent last year, the worst performance since the end of the financial crisis. But with ratification of the U.S.-Mexico-Canada trade agreement, the attainment of a first phase Sino-U.S. trade agreement, and a more predictable resolution to Brexit (though not Megxit), risks of burgeoning trade wars afflicting the worldwide economy abated.
The Sino-U.S. trade dispute has wreaked havoc on many economies, including Germany’s, which flirted with recession for much of last year, and many Latin American and African economies, which depend heavily upon a combination of Chinese economic growth and investment. The diminution of uncertainty helped induce IMF economists to establish a 3.3 percent predicted pace of global growth for 2020, which while not fabulous by historic standards, would represent substantial improvement vis-à-vis a lackluster 2019.
Alas, economists, whether based in Geneva, London, New York, Washington, Beijing, or Baltimore cannot predict certain things—like coronavirus or COVID-19. As of this writing, the epidemic has spread to every continent (except Antarctica), with more than 105,000 confirmed cases and in excess of 3,500 deaths. Three cases have now appeared in Maryland, all in Montgomery County. Undoubtedly, these numbers will rise in coming weeks.
Accordingly, economists are racing to downgrade their forecasts for global growth this year, including for the U.S. Goldman Sachs economists recently indicated that the U.S. economy will expand at a less than 1 percent annualized pace during 2020’s initial quarter and won’t grow at all during the second. Many policy analysts are now calling for a stimulus package in the U.S., perhaps as large as a trillion dollars to stabilize financial markets and solidify waning business and consumer confidence.
Most other economies are in worse shape. Nations like China, Japan, South Korea, Germany, France, and Italy were already facing profound economic challenges due to trade disputes, preexisting supply chain disruptions, and domestic political uncertainties. The spreading coronavirus serves to compound these fragilities, with the result being an ongoing partial strangulation of global economic activity.
Importantly, the U.S. economy enjoyed plentiful momentum coming into the public health crisis. An initial estimate from the Bureau of Labor Statistics indicated that the nation added 273,000 net new jobs in February. Job growth was also strong in January after ending 2019 on a strong note. Unemployment stands at 3.5 percent, a 50-year low.
First Coronavirus Cases Reported in Maryland
Maryland always seems to start of each year in lackluster fashion. Two years ago, a challenging winter blanketed Maryland, limiting job growth. Last year began with a federal government shutdown that overlapped with a period of swooning stock prices. Maryland’s economy would not regain any meaningful momentum until the summer. This year, it’s coronavirus, though of course we are not alone.
If one is searching for a silver lining, it may be that the nation is refocused on the importance of public health and medical research. Both of these are Maryland specialties, and the added focus should translate into more dollars pouring through these segments of the Free State’s economy. On the other hand, Maryland is the 5th most densely populated state in the nation, which may support faster spread of COVID-19.
Like the nation, the region comes into the crisis with solid momentum. The Baltimore metropolitan area added 1.9 percent to job totals last year, ranking it a solid 14th among the nation’s 25 largest metropolitan areas and ahead of all other northeastern communities. Washington metro added jobs at a 1.6 percent rate, ranking it 16th. Boston ranked 19th, New York 20th, and Philadelphia 22nd. Unemployment in both the Baltimore and Washington metropolitan areas has recently been below 3 percent.
