California is America’s largest single-state economy. If it were a nation, it would have the world’s fifth-largest economy. With a GDP of $3.2 trillion and a labor force of almost 20 million, it is highly influential in everything from national politics to American finances.
With news that the state is now tightening its Coronavirus restrictions, the stock market could have a rocky start to the week.
Soaring Coronavirus Cases in California
On Sunday, California surpassed its own record with 7,400 new Coronavirus hospitalizations. Cases are surging across the state with 1.2 million confirmed since the outbreak of the pandemic. A total of 19,121 Coronavirus-related deaths have now been reported.
State officials are preparing for another surge related to the recent Thanksgiving holiday, when millions of people traveled throughout America, despite the CDC urging citizens not to.
What are the New Lockdown Restrictions?
LA County, the most populous county in the United States has announced a lockdown beginning today, advising all residents to stay at home when not out for essential travel or work. Mixed-household gatherings have been prohibited, aside from religious activities and organized protests.
Restaurants may serve takeout and delivery, but no dine-in customers.
Further north in San Mateo and San Francisco, local governments have prohibited most non-essential activities and will impose curfews from today.
In Silicon Valley and Santa Clara County, all professional and school sports have been prohibited. People traveling to Santa Clara County from outside of a 150-mile radius will face quarantine.
Health officials had warned in late May that California was reopening too quickly. The recent wave of infections and hospitalizations support the sentiment. California’s hospitals will be overrun within three weeks without lockdown restrictions.
While the restrictions are obviously necessary, they will not be popular with a large portion of the public.
Impact on the Markets
California is home to some of the world’s largest companies, including Apple and Google. It is a major driver of America’s economy. With countless businesses being forced to reduce their operations, economic activity will decline in the Golden State.
This news could erode some of the market’s recent confidence, creating some volatility in the early hours of today’s trading session. If cases continue to surge nation-wide, this effect could continue into the week.
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