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COMMERCE STREET: How the coronavirus will impact the San Antonio economy

Many industry leaders are expressing concern about how the spread of coronavirus will impact the economy, both globally and locally.

SAN ANTONIO — As concerns about coronavirus dominate national headlines, San Antonio industry leaders are keeping in contact with officials and monitoring the situation to see how, if at all, reaction to the virus could impact the local economy. Currently, some say they are not seeing any impact, but they are continuing to stay informed.

On this episode of Commerce Street from KENS 5, we tell you what you need to know as the news about the coronavirus unfolds.

When KENS 5 spoke with Visit San Antonio on February 21, leaders shared that they had not seen an impact to business so far as a result of news that Americans being monitored for signs of coronavirus would be housed and tested at Joint Base San Antonio-Lackland.

So far, Director of Partner and Community Relations Richard C. Oliver says that has remained the case.

"We continue to be vigilant in monitoring developments regarding COVID-19, and making proactive outreaches to officials -- and our partners – regarding the situation," Oliver wrote. "At this point, we have had no adverse effect on our meeting or leisure visitor business. We’ll continue to gauge the landscape of things moving forward, but have been assured by officials that visitors and residents are at a very low risk of coming into contact with the virus."

Rey Chavez from the San Antonio Manufacturers Association says his members are watching the effects of news concerning coronavirus, but so far expect a "minimal" impact that could grow to moderate at most. 

"...We have a very diverse manufacturing industry in our region and depending on the sector, manufacturers can be impacted by the novel coronavirus, especially if they receive parts from China. For example, if they get circuit boards, ceramic electrical housing assemblies, wire harnesses and cables and other items needed for automotive, aerospace and medical manufactured equipment devices. 

Although some companies have larger inventories of these parts, if the coronavirus goes on for another month or so, resulting from China factory closings and supply chain transportation mode impacts, due to the virus, those companies could be affected. 

Some are already working with other suppliers from other countries, such as Mexico to fill their inventory needs. One positive aspect of the coronavirus is the reshoring of companies back to the US so they can be closer to their consumers such as manufacturers. As I said, the diverse manufacturing community we have will continue on for most do not get parts from China and manufacture goods that are predominately used within our state, U.S. and Mexico. 

From an economic impact standpoint, it will remain minimal, especially if manufacturers start to get their supplies from other sources outside of China. It could go to moderate depending on how long the coronavirus lingers on."

We reached out to Karl Eggerss, a Senior Wealth Advisor & Partner for Covenant, who has experience advising consumers on their finances and studying the broader markets- to get some of his thoughts and insight on all of this.

Q: When we hear "coronavirus," we often think about the public health implications. But, in what ways can a health epidemic- or even just the threat of an outbreak- affect the economy on a global scale, or even down to nationally and locally?

"First of all, we can talk ourselves into a recession, so for example, when folks are scared about traveling, about going on a cruise, anything like that, and they stop doing that because they are fearful...them not going on that trip is going to affect the cruise line, airline industry, Uber.  All that chain reaction along those lines can be affected by that and we are seeing that.

The main thing we are seeing are supply disruptions, meaning if you have a product and you need parts from China to put your widget together, you can't get those parts. So you may have the demand for your product, but we don't have the supply."

Q. Here in San Antonio, we have evacuees being cared for at JBSA Lackland. While local leaders have tried to temper anxiety surrounding novel coronavirus, there's been a lot of media attention and San Antonio has been mentioned often in that news. Can situations like this have an impact on tourism?

"If you know people have coronavirus in a particular city, and you want to take a trip there, would you rather not choose that city and go to another city? Maybe. And especially San Antonio. I've lived in San Antonio my whole life and it's always been known for tourism, it's a great tourism city, and we don't want that reputation tarnished.

That is an issue when you see folks being housed here, being quarantined here. It could impact, we are seeing this really spread to many industries. Not just because of the people being quarantined here, but supply disruptions."

Q. Visit San Antonio says it is being vigilant in monitoring developments regarding COVID19 and proactively reaching out to officials and their partners about the situation. How important is that flow of information and just making sure that people have an accurate idea of what they are heading into and that people know that San Antonio is still safe to visit?

We always want transparency, we always want information but sometimes we may get too much information, especially nowadays with technology. You and I are here on a podcast, people can go on the KENS 5 website, we get information whenever we want it and as much as we want it. And sometimes we get so much information, that people get fearful of things that won’t impact them necessarily.

Q: Much of the coronavirus activity is concentrated overseas. The San Antonio Manufacturers Association says there are a number of manufacturers that could eventually be impacted if they require material from China. President and CEO of the group Rey Chavez says manufacturers can be impacted by the novel coronavirus, especially if they receive parts from China.  For example, if they get circuit boards, ceramic electrical housing assemblies, wire harnesses and cables and other items needed for automotive, aerospace and medical manufactured equipment devices. These are things we think we can get anywhere, but how necessary are they to manufacturers and do we have those type of manufacturers in San Antonio that make those products?

"We are not known as a technology hub just yet, like San Francisco is. But the technology industry's probably impacted more than anyone. It's something consumers need to watch out for. Are they going to pay more for electronics because of the limited supply of goods we have like phones and tv's. 

If there is limited supply and there is more demand, guess what happens? The price goes up. So we may need to start watching for inflation on some of those things, but technology is the hardest hit.

The thing that has happened the last few years, we were getting a lot of things from China. We have great trade partners in Canada and Mexico, we have a great trade deal with them. so you are starting to see some manufacturing shift to Mexico and South Korea, and shift to other countries outside of China, but we are not quite there yet. And in fact, if you kind of look at China and its impact on the global economy now versus in 2003 with SARS, they are about triple the impact, they are about triple the GDP. And that is why people are taking this more seriously, because back in 2003, there were people that maybe were not getting things from China."

Q. On a more individual level, with each wave of news about coronavirus we see the markets reacting. What does this mean for my own finances and do I need to be concerned yet?

You always have to look at a portfolio matching up with your goals and objectives. You are young, you don't have a lot of grey hair yet. As you can see, I am greying a little bit. If you are younger, you can afford to take more bumps in the road, more volatility, in trying to get higher returns.

The issue is that most people should have a portfolio where they can sleep at night, knowing you are going to have situations like this. Whether its SARS, Ebola, a missile attack in Iran, it can be 9-11. Most of those things, investors have gone through, but just a few weeks ago, we were at all-time highs in the stock market. So we will get through this, I am confident in technology and science that this will get behind us. It's a sucker punch to the economy, it's a sucker punch to people's portfolios but this is not the time to say "well maybe I should be more conservative". That was two weeks ago, that was the time when you look at your portfolio and say I need to have a balanced approach."

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