Stock markets plunged on Thursday amid fresh warnings that the coronavirus outbreak is worsening, deepening fears among some Republican figures that a global pandemic could damage President Trump’s reelection campaign.
The latest market drop came a day after Trump appeared in the White House briefing room to signal he was taking control of a crisis response that had been plagued by muddled messaging.
However, his intervention, placing Vice President Mike Pence in charge of the response, raises the possibility that the White House will be held responsible for any missteps or deaths.
“But that’s what leaders do,” said a key 2020 campaign donor. “Barack Obama wouldn’t have done it, but, with that, comes risk.”
The fear in the White House was already that the coronavirus, which has infected 60 people so far in the United States, will turn out to be a “black swan” event, or a low-probability phenomenon that turns out to have unpredictable, large-scale effects.
On Thursday, those effects were a sixth day of stock market falls. It meant the S&P 500 had dropped by as much as 11.2% from record highs a week earlier.
Businesses around the world unveiled safety measures designed to prevent workers from falling ill. Facebook announced it was canceling its annual developer conference, scheduled for May in California, and Microsoft said it was pulling out of a gaming conference next month.
For a president running for reelection on a platform dominated by stock market growth and economic prosperity, the prospect of financial gloom spells electoral peril, according to a new analysis by Goldman Sachs.
“Economic growth, particularly in 2Q of election years, has been a key predictor of past presidential elections,” analysts said in a report released on Wednesday night. “If the coronavirus epidemic materially affects U.S. economic growth, it may increase the likelihood of Democratic victory in the 2020 election.”
Earlier, Trump had sought to play down the dangers and pushed back against his own officials, who had warned of the possibility of a “severe” impact on everyday life.
“I think the stock market will recover,” he said on Wednesday, before conceding that the disease “will have an impact” on the gross domestic product.
His reassurances were welcomed by Republicans.
Sen. Joni Ernst of Iowa said: “I don’t have concerns about impacting the election. Everybody just needs to make sure they are safeguarding themselves, washing their hands, doing all of the things necessary to prevent any sort of virus, whether it’s the flu that we experience every season or something like the coronavirus.”
Key figures even see a potential upside for America First messaging.
A senior administration official said the crisis was a chance to underline the message to businesses that having China in the supply chain adds risk.
“To be honest, while there is risk to the overall U.S. economy, the general state of the Democratic primary has most politicals in the administration feeling quite optimistic about their chances in November,” he said.
“The reviews for the president’s action yesterday, even among his sharpest critics, were largely positive. He hit the right tone of concern but was not hysterical.”
