News that President Donald Trump has been infected with a virus that’s killed more than 200,000 of his fellow Americans has further unsettled investors and business leaders who were already on edge ahead of the November election.
It’s a truism that investors hate uncertainty. But this year had been unusually chaotic, even before the leader of the world’s largest economy and his wife tested positive for Covid-19. The diagnosis deals a new psychological blow to a recovery that was already losing steam. Lack of certainty could be just as damaging economically as anything else this year.
The data: An index published by the Federal Reserve Bank of St. Louis that tracks economic policy uncertainty spiked to record highs in May as the pandemic rampaged across the United States. The index, which is based on newspaper stories that discuss uncertainty, changes to the tax code and disagreement among forecasters, has been elevated for most of the year. Not even the global financial crisis produced as much uncertainty.
“Every uncertainty measure we consider rose sharply in the wake of the Covid-19 pandemic. Most measures reached all-time peaks,” the group of economists who created the index wrote in a working paper published