The current coronavirus disease (COVID-19) outbreak has led to tens of thousands of cases and thousands of deaths worldwide. In addition to the disease's mortality and public health effects, it may have potentially significant economic implications, including productivity losses, supply chain disruptions, labor dislocation, and potential financial pressure on businesses and households. Relatively few federal programs are available to provide timely economic relief to affected businesses. This Insight considers the outbreak's economic development implications and policy considerations for Members of Congress who have shown interest in addressing the economic dimensions of this public health issue.
COVID-19 is a newly designated disease caused by a previously undetected coronavirus. Most cases have been reported in China, with additional cases on every inhabited continent. Clusters of illness have occurred in South Korea, Japan, Singapore, Italy, and Iran. For more information on the health and epidemiological aspects of COVID-19, see CRS products R46219 and IF11421.
The COVID-19 outbreak is foremost a public health issue. However, the epidemic itself and containment measures in China and elsewhere could have significant economic implications for the United States and globally. In the short-term, the COVID-19 outbreak is primarily a threat to businesses dependent on supply chains in China, or for exports there. However, many economists have warned that a more prolonged crisis may see broader economic disruptions if workplaces and schools are closed to contain the outbreak, and medical and food supplies dwindle due to disrupted supply and increased demand.
In China, mass containment measures have disrupted global supply chains and capital markets. In the near term, the outbreak's effects on the U.S. economy could be limited to localized disruptions for businesses and workers—particularly in communities dependent on technology manufacturing and tourism. In certain cases, supply chain issues may stall production, prevent companies from fulfilling orders, and potentially impact firm revenues.
In a prolonged or wider epidemic, supply chain issues may further compound. Growth could slow further, and affected companies may be forced to furlough or lay off workers, and others may slow hiring. As demonstrated in China and elsewhere, social distancing measures can effectively stop local economic activity, which may impact localized labor markets, household finances, and governmental tax revenues and service delivery. Additional considerations include potential shortages of medical supplies and foodstuffs, other ancillary health effects, and the U.S. medical and public health system's ability to cope with a significant outbreak.
Many Members of Congress have heard concerns from constituents affected by supply chain-, exports-, and tourism-related disruptions from the outbreak. Relatively few federal programs exist to provide timely relief to businesses for outbreak-related disruptions. Some programs include
In the event that disruptions continue and grow, public and non-profit organizations may consider tapping various federal economic development resources, including
Federal economic development programs are generally not equipped to provide rapid support to firms or communities affected by public health emergencies, though unemployment compensation programs have the ability to rapidly respond and provide immediate income support. In response to a COVID-19 outbreak, Congress may consider measures used in past disasters or economic crises:
Other federal emergency authorities could be utilized in more severe scenarios for individual and public assistance. In such cases, localities with major revenue shortfalls from federally declared disasters—such as those highly dependent on a dislocated industry, such as tourism—could utilize Community Disaster Loans, which provide up to $5 million in liquidity and are potentially forgivable. The President may also call upon the Defense Production Act (DPA) to mobilize key segments of the economy in response to the outbreak. In major national emergencies, DPA authorities may be used to rebalance disrupted critical supply chains, and to allocate and procure emergency supplies.