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As the stock market tumbled and oil prices collapsed on Monday, Gov. Gavin Newsom’s top economic officials sought to project calm from the world’s fifth-largest economy in the wake of the coronavirus pandemic and a Russia-Saudi Arabia oil price war.
Lenny Mendonca, the governor’s chief economic and business advisor, said that California is assessing the growing economic impact of the virus, which has shut down schools, suspended in-person classes at UC Berkeley and Stanford, canceled major tech conventions such as Google I/O, and sidelined dockworkers at the Ports of Long Beach and Los Angeles.
Mendonca sought to strike a balance between reassurance and prudence.
“I want to emphasize that there will always be economic ups and downs, but people will continue to visit our state as they always have,” he told a meeting of state agency heads gathered at the Capitol for an update on international trade efforts. “Our arms will be wide open when our friends from China and around the world are ready to travel again.”
Agency officials all sounded the alarm on how the coronavirus outbreak might affect demand for California products from almonds to computer chips. On the same day the Grand Princess cruise ship docked in Oakland, the state’s tourism bureau reported a significant hit from people taking precautions against further spreading the virus.
Business travel has dropped and cities are hemorrhaging convention business, said Visit California president and CEO Caroline Beteta, adding that the sector is unlikely to recover this year.
California’s overall tourism economy is $145 billion, but the state has been disproportionately impacted by the quarantines of millions of people in China. In 2019, California welcomed about 1.8 million Chinese visitors who spent $4 billion in the state. Instead of a projected 3% growth in Chinese tourism, Beteta said the state now is projecting a 28% drop for the year.
“It’s high, high impact from that market alone,” Beteta said. In response, the state’s tourism arm has targeted Chinese tourists with a marketing campaign.
Up and down the coast, California’s ports are experiencing a negative impact on trade and goods shipments. Last week, Gene Seroka, the executive director of the Port of Los Angeles, said 25% of the port’s traffic has vanished.
Max Oltersdorf of the Governor’s Office of Business and Economic Development, or Go-Biz, said that as of Monday, there have been at least 60 vessel cancellations at the ports of Long Beach, Los Angeles and Oakland.
Port officials in Long Beach and Los Angeles report some dock workers are being paid to stay home because there’s not enough work. The ripple effects will be felt by truck drivers, farmers and many other workers.
Economic forecasters say California may be better off enduring the short-term economic pain of shutting down public spaces such amusement parks and public gatherings such as conventions in order to limit virus transmission and improve the chances of a quick recovery.
“You want people to overreact right now to nip this thing in the bud,” said Chris Thornberg, founding partner of Beacon Economics, an independent economic research and consulting firm. “If this thing does get out of control and starts to affect the third quarter, then we have deep, deep trouble.”
Thornberg said while it may be inconvenient for businesses and their workers for a few weeks, it’s a lot better than a widespread outbreak that takes down the state’s economy.
As if the coronavirus news wasn’t unsettling enough, an oil price war between Saudi Arabia and Russia further disrupted the world economy over the weekend, sparking a historic collapse in oil prices as traders prepared for the Saudis to flood the market with crude to regain market share.
U.S. oil prices sank to a four-year low — and shares of California-based Chevron fell with them, though by less than energy stocks elsewhere in the country, where oil companies are less diversified and less financially prepared.
Newsom’s advisors note that California’s state budget does have some built-in resilience. The governor has proposed a $222 billion budget, which includes $21 billion in reserves from several sources.
Workers have a safety net, too. In addition to activating an array of public health initiatives, the governor is reminding workers that state support is available to workers impacted by the virus. Employees who have or have been exposed to the coronavirus can file for disability insurance. Employees who have hours reduced or are laid off due to coronavirus can file for unemployment. And employees who are caring for a sick or quarantined family member with coronavirus can file for paid family leave.
Those benefits, however, are often unavailable to gig workers and other freelancers, leaving them choose between staying home and giving up pay or increasing their chances of exposure.
“It’s so early, so fluid — it’s hard to see the arch of where things are going,” said Lt. Gov. Eleni Kounalakis, who is overseeing trade efforts for the state.
CALmatters.org is a nonprofit, nonpartisan media venture explaining California’s policies and politics. Read more state news from CALmatters here.
Find comprehensive coverage on the Midpeninsula’s response to the new coronavirus by the Almanac, Mountain View Voice and Palo Alto Online here.
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Rumors fly about potential closure of Mountain View's Cinemark Century 16 movie theaterSeptember 1, 2026 7:04 pm
This reminds me of the Y2K hysteria, for those of you who remember.
Sell all your stocks! Buy gold and bury it. Don’t go out of the house! Buy up all the water, peanut butter and toilet paper! The world is going to end!
Its the bloody flu folks, why don’t you just calm down.
Our fear is bringing down a perfectly good economy. STUPID!!!!
On the bright side, there is hardly any traffic, smog, and no lines for movies and good restaurants.
@ Tina
Yes. But with a much higher death rate. ~61,000 flu deaths per year out of over 40 million reported cases per year: 0.1525% mortality. 4,584 covid-19 deaths out of 124,578 reported cases: 3.68% mortality.
With a longer incubation period with who knows how many Typhoid Marys spreading it without actually being sick themselves.
If we all took adequate flu precautions in the first place, I suppose this wouldn’t be such a big deal. But we )most people) don’t.
I know I have had disagreements with MV Renter from time to time.
But I have to agree with MV Renter in this one.
Unfortunately, the only thing we can do is ride this virus out.
Either get a vaccine real fast so the people will not need to be sick to get protection.
OR wait until all people globally are exposed and either develop an immunity successfully, or even with medical intervention, they will die.
The only other alternative is isolation of all people.
That is not only even more dangerous because there are circumstances that could kill you if you’re alone, or by simple lack of human contact, some may actually hurt themselves (even kill themselves). But the key thing is isolation WILL kill the economy because it cannot work under that situation.
I hope the world will be able to ride this out with the minimum loss of life.
But there is no shortcutting this.
@ Tina….I kinda see the point you’re trying to make, how we prepared for something that never happened. But this IS happening. It’s a pandemic. And recent experts have said this isn’t a “blizzard”, that we are going to experience a “winter”. Several months before the “curve” starts. Science and math don’t lie, watch a video about the various formulas for “exponential growth and epidemics”. This isn’t a “suck it up” moment. We ALL need to be smart about this and help shorten the equation.