1 1 (February 28, 2020)

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               Researh Sevice

COVID-19: Federal Economic Development

Tools and Potential Responses

February 28, 2020
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 Economic Development Implications

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 IFl 1421.
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
                                                               Congressional Research Service

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