Coronavirus has mixed impact on Michigan’s economy » WDET 101.9FM

Alex McLenon

The stock market has been in free fall for the past few weeks amid fears of COVID-19, but there have been relatively few economic implications in Michigan so far.

State residents are starting to see the financial effects of COVID-19 at the gas pump.

Talks to cut oil production amid global travel restrictions fell apart over the weekend. As a result, Middle Eastern oil producers showed strength by increasing production, creating a surplus and driving down prices.

Coronavirus in Michigan: key information

Latest developments: Two confirmed cases of COVID-19 have been identified in Michigan.

What you should do:

  • Wash your hands with soap and water for at least 20 seconds.
  • Avoid touching your eyes, nose or mouth with unwashed hands.
  • Cover your mouth and nose with a tissue or the top of your sleeve when you cough or sneeze.
  • Avoid contact with sick people.
  • Stay home if you are sick and contact your health care provider.

Sam Huszczo is a financial advisor and founder of SGH Wealth Management. He tells WDET’s Alex McLenon that if Wall Street prepares for the worst-case scenario, it could be some time before serious economic impacts are felt in Michigan.

Click on the player above to hear the interview with Sam Huszczo of SGH Wealth Management, and read the excerpts, edited for length and clarity, below.

Alex McLenon, 101.9 WDET: What are we seeing happening with the stock market and how does it relate to the coronavirus?

Sam Huszczo, SGH Wealth Management: Investors are trying to figure out what the high-end implications of supply chains, reduced travel and any other incidental spills of what could be a worst-case scenario could be. When the elements are at their most uncertain point, that’s usually when we can allow our minds to enter the worst case scenario.

So what’s really happening is we’re looking at what those worst-case scenarios are. But a lot is still too uncertain to make any real assertions as to what impact this might have on bugs. But for sure, emotions have set in, and that’s why we’ve seen the trickles that we’ve seen.

Over the weekend, one of the more recent developments was what is happening with Moscow and OPEC. Can you explain what is happening there?

Oil has been crushed this year outside of even what’s going on in negotiations and things of that nature. I would say that OPEC is losing some of its power, simply because the United States is now also a big oil player. So I wouldn’t be surprised if other regions tested OPEC metal at a time like this.

But honestly, the biggest thing to drive this economy forward in our view is simply consumption. One thing that gives us confidence is that unemployment is extremely low. So as long as everyone still has jobs and Americans act like Americans and spend a large portion of their paychecks, consumptions alone could propel this economy forward.

Could that spending be hampered by coronavirus fears?

Yeah, I mean it’s that interesting. The largest consumer sentiment survey is just the University of Michigan Consumer Sentiment Survey, which we read religiously. Two weeks ago, only 8% of respondents mentioned the coronavirus as a problem. The most recent last Friday, which jumped up to 20% of respondents mentioning the coronavirus.

So it’s definitely a lot more cutting edge and maybe even higher at the end of this week as well. But to put that into context, consumer sentiment is 7.7% higher than it was a year ago today. How does this couple with the coronavirus panic? It’s a hard thing to decouple, but I’d say people are a little more confident than they were at least a year ago.

How could people expect to see the impact of what is happening with the stock market? Whether it’s a fear reaction or overreactions or whatever, how could it trickle down to the local level and how could people notice it?

The way the coronavirus responds in terms of case numbers and mortality levels, these numbers need to be watched very closely over the next 9-12 weeks. But in local Detroit terms, I mean, I’m a lifelong Detroiter. I wish we had more than one tourist area in the Detroit area at least, but tourism is going to drop dramatically.

Everything else will have to do with supply chains. Obviously, being part of the automakers, anyone involved in sourcing from China or something like that, it could get a lot more difficult. But, if this goes on for a long time and some of that manufacturing shifts back to making items in the United States, the net result for us as citizens would be higher prices.

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  • Alex McLenon is a reporter with 101.9 WDET. McLenon is a graduate of Wayne State University, where he studied Media Arts and Broadcast Production and Journalism.

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