Will coronavirus destroy the global economy?

The US economy was affected by a climate of fear

Question: Will coronavirus destroy the global economy?
Position1 of 4›: The coronavirus is bringing down ill-prepared national economies
Argument1 of 2›: The US economy was affected by a climate of fear

Fearmongering and uncertainty amongst US investors is causing share prices to plummet at record speeds.

The argument

Despite relatively few cases in the US at the time, the US stock market decreased in value by $1.7 trillion in a two day period in late February 2020. This is not for any material reason. Instead, it is because of an overblown culture of panic that is surrounding the spread of the disease. This is consistent with documented patterns of human behaviour. Humans tend to overreact to risks that are out of the ordinary and that generate widespread fear, while under-reacting to more everyday risks that might be more likely. People are more likely to fear dying in a place crash than in a car accident. The market crashing is a reflection of this. Stocks and the economy do not exist in a vacuum. They are largely driven by human behaviour. The coronavirus is not impacting the economy - human emotion is.

Premises

[P1]With few US cases, the stock market still lost $1.7 trillion in two days from an overblown culture of panic, not any material cause. [P2] This fits how humans overreact to unusual, fear-generating risks while under-reacting to more likely everyday ones. [P3] Since stocks are driven by human behaviour, it is human emotion, not the virus itself, hitting the economy. [C] Therefore, because the US economy was brought down by a climate of fear, the coronavirus is bringing down ill-prepared national economies.

Counter-arguments

A rebuttal is that this rests on a false dichotomy. A market fall ahead of a case surge reflects investors pricing in the virus's expected real effects — lockdowns, disrupted supply chains, collapsing demand — which is anticipation of material harm, not causeless panic. The fear is a rational response to a novel pathogen of unknown severity, so revising expectations sharply is not obviously an overreaction. Critics add that the plane-versus-car analogy assumes irrationality it has not shown. Even granting that markets are driven by human behaviour, the emotion in question is a response to the pandemic, so "human emotion, not the virus" splits into rivals what is really a single cause.

Rejecting the premises

[Rejecting P1] A market fall ahead of case surges reflects investors pricing in the virus's expected real effects — lockdowns, disrupted supply and demand — which is anticipation of material harm, not causeless panic. [Rejecting P3] That stocks are driven by human behaviour does not separate emotion from the virus; the fear is a response to the pandemic, so the two are the same cause, not rivals.