Coronavirus will slow US GDP growth: Economist
Roubini Macro Associates CEO Nouriel Roubini discusses the impact coronavirus can be expected to have on U.S. economic growth.
The impact of the coronavirus on U.S. corporations is becoming clearer after a major selloff whacked 1,031.61 points off the Dow Jones Industrial Average.
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United Airlines and Mastercard, late Monday, told investors the bottom lines will take a hit because of the disease which, according to reports, is spreading outside of China to South Korea and Europe with new cases in Italy on the rise.
DOW TUMBLES OVER 1,000 POINTS ON CORONAVIRUS FEARS
As a result of the ballooning uncertainty, United withdrew its prior financial forecast for the entire 2020 year issued in late January.
|UAL||UNITED AIRLINES HLDG.||75.47||-2.54||-3.26%|
"As a result of COVID-19, we are currently seeing an approximately 100% decline in near-term demand to China and an approximately 75% decline in near-term demand on the rest of our trans-Pacific routes. We are managing our business to minimize the operational and financial disruption. For the first quarter of 2020, we currently expect the reduced revenue on our trans-Pacific routes to be partially offset by the related decline in fuel prices and other cost savings" said United in a filing with the Securities and Exchange Commission.
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United is maintaining its first-quarter profit guidance of $0.75 to $1.25 but warned it was impossible to forecast further out.
As for Mastercard, management also echoed limited visibility beyond the first quarter.
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"Cross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted by the Coronavirus. As a result, we now expect that if the trends we have seen recently — primarily in our cross-border drivers — continue through the end of the quarter, year-over-year net revenue growth in the first quarter will be approximately 2-3 percentage points lower than discussed on our January 29, 2020 earnings call" Mastercard said in an investor update.
"There are many unknowns as to the duration and severity of the situation and we are closely monitoring it. If the impact is limited to the first quarter only…"
The shares of both companies indicated a lower open on Tuesday.
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