 How could COVID-19 affect the U.S. economy? The impacts come in four forms as economists, Michael Walden, shortages of products from China, reduced sales to China, a drop in consumer spending, and falling stock prices. Let's look at these one by one. The U.S. imports over $500 billion of products each year from China. If factory workers in China can't work because of illness or quarantines, production goes down. This can already be seen in shortages of drugs, medical products, bicycles, and board games. On the flip side, U.S. companies sell over $100 billion of products like computer chips and soybeans to China. These sectors already took a hit from the U.S.-China trade war of the last two years. The optimism from the recent limited deal might be short-lived as the virus outbreaks impacts the Chinese economy. Significant declines in spending are usually the most direct cause of recession. The SARS outbreak in 2003 caused a decline in consumer spending on products like appliances, vehicles, and furniture. However, there might be two positive effects, a drop in gas prices and a reduction in interest rates. Good news for people borrowing money for a home or vehicle. One thing traders and investors do not like is uncertainty. No one knows how bad the outbreak will get and what the impact might be. A falling stock market could affect the economy by sapping consumer confidence and reducing their spending. As long as U.S. consumers continue to spend, the economy will continue to expand and there's little risk of recession. If the stock market tumbles further, however, all bets may be off.