Vaccines Will Bring Economy Near Recovery By End Of 2021

chart showing timeline of vaccine availability

Timeline for vaccine availability BOB WACHTER

Three new reports on vaccines working effectively lead to optimism about the economic forecast. That’s great, leading business leaders to wonder just how fast the infection will die out, and thus how fast the economy will recover. Will it be the first quarter of 2021 or the last, or into 2022? The answers depend on the epidemiology of Covid-19.

The aggregate economy will be able to get back to normal totals around the end of 2021, though some damage will linger well into 2022. In addition, changes within the economy will take some sectors to new heights while leaving other sectors permanently weaker.

A vaccine reduces the spread immediately, though not completely. Covid-19 in the U.S. has an R0 value estimated by the CDC to be 2.5, meaning that when an infected person lands in a country where everyone is susceptible to the disease, that person spreads it to 2.5 others, on average. Each of those people spreads it to another 2.5, and so forth. After five rounds, infections have reached nearly 100 people. After another five rounds, the disease has infected nearly 10,000 people.

If we got the first case when 10% of the population had already been vaccinated, then instead of an additional 2.5 people getting infected the number would be just 2.25, or 90% of the R0 value. That’s not a solution, but it’s a start down the road to a solution. Projecting a simple epidemiological model into the future, I saw that vaccinations have a substantial impact once about 40% of the population get their shots. There’s some improvement earlier, and continued improvement with more vaccination, but the 40% figure is a good benchmark to look for.

Most of the U.S. population will be vaccinated by the end of 2021 according to an evaluation of estimates by Bob Wachter of the University of California San Francisco medical school. His chart, shown above, suggests that the United States will reach the 40% benchmark before mid-year of 2021. However, in economics, every straight line is considered metaphorical, and that probably applies to this chart as well.

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