Coronavirus panic could severely hit US services economy, former Fed insider tells Boom Bust

Stocks are seeing a second straight day of losses as global coronavirus fears shake the financial markets. RT’s Boom Bust looks into economic reactions and at how the Federal Reserve could react.

Former Fed insider Danielle DiMartino Booth says “you can’t just ignore what’s going on with the coronavirus.”

Booth points out that the Federal Reserve should be looking not at the manufacturing supply chain but focusing on the greater part of the US economy, which is the service sector.

According to her, Chinese tourists may only make up four percent of travelers to the United States but they account for 11 percent of what is spent by or for tourists when they visit the country. This, along with other disruptions to services, could be much worse than the impact on manufacturing, she says. It also could fairly quickly trigger job losses in certain sectors.

“It’s clear that the policy makers at the Fed have decided to maintain a tough line even as markets began to go into this kind of panicky mode,” she says.

“The Fed should have been preemptive when we started to see how bad things could get.”

For more stories on economy & finance visit RT's business section