HOW TO THINK ABOUT IT

Supply and demand. The global economy’s currently being hit on two fronts: Sluggish manufacturing has disrupted supply chains around the world, leading to a so-called “supply shock,” while spooked consumers are spending less on travel, goods and other luxuries, producing a “demand shock.” Taken together, they’re sending investors into panic mode because it’s a self-perpetuating cycle that could spell serious short-term danger.

Central decisions. ECB chief Lagarde is under pressure to act after Wednesday’s decision by the U.K.’s central bank (which itself followed a recent Federal Reserve rate cut). But she’s got few options, since local interest rates are already either at zero or negative. Buying more government and corporate bonds, as well as easing lending to small- and medium-sized businesses, may be the only tools the ECB can muster. But experts say monetary policy isn’t useful anymore: Rate cuts take longer to be felt — and besides, panicked people aren’t very likely to spend on big-ticket items such as cars and houses anyway.

More money, fewer problems? That’s why analysts say fiscal measures, such as President Donald Trump’s proposed payroll tax cut, are a better bet. But some are calling for more aggressive moves that shield workers and encourage spending. Among those options are expanded unemployment insurance or even free cash, much like the 2008 U.S. stimulus that sent hundreds of dollars to each individual or family to help cushion them from the oncoming recession. Yet that’s no magic bullet either, since it’s unclear whether such pocket-boosting measures will be compelling enough to get people shopping at packed malls or dining out. Italy, the hardest-hit country in Europe, has sought to lighten the burden on its own citizens by temporarily suspending mortgage payments.

Tech-tonic shifts. Besides laying waste to the global economy, the coronavirus crisis is also testing just how technologically savvy various industries — from tech firms to Ivy League universities — really are. Social distancing might help contain local outbreaks, but places as varied as Nike factories and Starbucks cafés still depend on the physical presence of both workers and consumers. How will universities manage with virtual classes, without students filling dorms and using other on-campus services? Can Wall Street traders manage remotely? The answers to these questions, which coronavirus may help expose, could be even more revealing for the future economy.

WHAT TO READ

The Best Stimulus Is Coronavirus Testing Kits, by Alan S. Blinder in The Wall Street Journal
“Interest-rate cuts have little economic impact until a year or two passes. It’s too late for monetary policy.”

There’s No Need to Panic About a Recession by Henry Olsen in The Washington Post
“For now … the market decline looks to be just another example of how traders use unwelcome news as an excuse to take profits.”

WHAT TO WATCH