Many factory workers were originally supposed to be back to work after Chinese New Year on February 3rd. That date was pushed back to February 10th. Only a fraction came back. Another group was supposed to come back on February 17th. Only a fraction of them came back.

Even where workers came back there is not full production. If there are specialists involved in the manufacturing process, and they are missing, there is no production but a build up of WIP. Where there is full production there is often not any drivers to pick up the product and take it to the port. Some factories are requiring their workers to go through two weeks of quarantine before going back to work.

This situation is not unique to China. China supplies a lot of parts and raw materials to other countries. If there is no product, the supply chains come to a grinding halt in those countries.

This doesn’t even include the effects on the financial markets. If factories don’t produce, they don’t get paid. If they don’t get paid, they don’t make loan payments. They don’t make loan payments, and companies default.

Consumers have not felt the pinch yet, but they will. Many U.S. companies will keep two to eight weeks of inventory on hand due to the long lead times from Asia. Currently they are working through this inventory, but they aren’t receiving anything else in and may not for another 12 weeks.

China’s GDP has seen consistent growth for the last 40+ years, but 2020 will be different.