We all have our fantasies for life after the pandemic. My goal is to write about the economy without considering an epidemiological outlook.
The day will come. Right now the economy depends on the coronavirus. Both have cloudy predictions.
The best case scenario: Vaccines, combined with previous infections, immunize enough of the population to allow the previously normal economy to return. We will travel, gather together and meet face to face with no fear and no bothersome precautions like masks.
That could happen, maybe even by the middle of the year if everything is going perfectly. It would be more likely in late 2021 or early 2022.
Unfortunately, the vaccination campaign did not get off to a good start. In the United States, around 3.2 million people had received both injections by Jan. 24, according to the CDC vaccine tracker. Another 18.5 million had received their first dose.
21.7 million Americans are now or soon to be fully vaccinated. This is a good start, but far from the goal.
And now we have another problem.
As I mentioned three weeks ago, a new and more contagious variant of the coronavirus is spreading. There are actually several, but for now the main concern is “B117”, which first came up in the UK.
Research confirms that B117 actually spreads more easily. Some data show that there may be higher death rates as well. This second part is still uncertain, but in both cases it is bad news.
Laboratories can only distinguish B117 from the original version by completely sequencing each DNA sample. The US does this less than 1% of the time. But Denmark sequences everyone Case and B117 grow exponentially there, even if the total number of cases decreases.
If this trend continues, the most recent improvement may only be a few weeks before B117 reaches its full potential. It’s already happening in Portugal. The daily fall curve fell towards the end of the year and then quadrupled in less than a month. Many are associated with variant B117. Great Britain, Ireland and Israel had similar peaks.
Photo: Our world in data
We know that B117 is spreading in the US. The question is whether progress in vaccination can stop it. We will see.
The risk is serious. US hospitals’ capacity is still congested after some recovery this month. It could be catastrophic if B117 causes the kind of spike seen elsewhere, both in lives lost and economically.
But there is an even worse possibility …
This idea that vaccines will save us rests on several assumptions.
- As mentioned earlier, we can vaccinate humans faster than the virus reaches them. That remains to be seen.
- A second assumption is that the vaccine will protect both people from COVID-19 disease and prevent them from spreading the virus.
- Another reason is that the vaccines work against new variants and provide immunity that lasts long enough for the virus to recede. Scientists believe it, but only time will tell.
- Another assumption is that the millions who were previously infected (and who may not even know it) now have some permanent immunity. This is important as it reduces the number of people who need to be vaccinated.
On this last point, we should focus on the experience of a Brazilian city.
About 2.2 million people live in Manaus, deep in the Amazon rainforest. COVID-19 took a hard hit last year, overwhelming hospitals and cemeteries. Antibody studies showed that around 76% of the population was infected by October 2020.
At this level Manaus should had herd immunity. Instead, it is now experiencing an even worse outbreak. The hospitals are running out of oxygen and a health worker described the situation as a “total massacre”.
How is that possible?
Well, the studies that showed so many people were infected could have been wrong. The sample group may not have been randomized properly. Statistics are not perfect. Laboratories make mistakes.
But it could also mean …
- The immunity of the virus patients waned after a few months or
- It didn’t protect them from new variants.
This is the tail risk.
If survival of this virus does not leave people with permanent immunity or protect them from new variants, We will be totally dependent on vaccines against an evolving virus. We could never Achieve herd immunity.
That wouldn’t necessarily mean doom. We’d find ways to deal with it. In economic terms, however, this would mean that growth will not resume as quickly as many currently think.
Giant asteroids are rare, but they do happen. That’s why dinosaurs disappeared.
Failure to achieve herd immunity would likely not be an extinction level event, but it would be a serious long-term global challenge. So we might want to think about it.
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