For months now, one thing has been apparent - the only way we’re going to make our way to a post-pandemic world is by developing and distributing a COVID-19 vaccine. Immunizing the majority of the population is key to stopping the spread and protecting our community's most vulnerable members.
With safety as a top concern for many, the economy is a close, close second. COVID-19 sent citizens around the world spiraling into financial uncertainty. Millions lost their jobs, thousands of small businesses have closed permanently, many families face eviction and governments have scrambled for months to offer assistance.
With viable vaccine trials indicating mass availability, what should be expected in regards to the economy? While no one can know the answer for sure, there are some factors we can consider as of now.
Where Do We Stand With COVID-19 Vaccines?
On December 8, 2020, a 90-year-old British woman became the first person in the western world to receive a vaccine for the coronavirus.1 The vaccine, developed by Pfizer and BioNTech, was approved for use in the United Kingdom first.
Within days, Canada gave the vaccine a green light and the United States’ Federal Drug Administration (FDA) vaccine advisory panel gave it a thumbs up as well. Healthcare workers and government leaders in America began receiving a COVID-19 vaccine the week before Christmas.
How Vaccines Currently Impact the Economy
In determining how the COVID-19 vaccine may impact the future economy, it’s important to acknowledge how current, commonly used vaccines help keep the global economy going.
Vaccines play a major role in:2
- Preventing loss of productivity in the workplace (due to illness).
- Making travel safe & protecting travelers against disease when visiting foreign places.
- Helping individuals remain active, contributing members of society for a longer period of time.
- Empowering children to increase their cognitive skills, improve their physical abilities and perform better in school.
Simply put, vaccines help members of our society contribute to the greater economy by working regularly, spending money on things like vacations as well as goods and services and raising children who will do the same when they grow up.
As we saw in 2020, a virus running rampant has a vast and sharp rippling effect - governments call for widespread shutdowns, people can’t make money and therefore can’t spend money, travel halts and the economy, ultimately, suffers.
Prevention Vs. Treatment
There’s a common phrase, “An ounce of prevention is worth a pound of cure.” When it comes to the economic impact of pandemics, the costs associated with prevention (a vaccine) could be less than the costs associated with treatment.
Meaning, aside from the obvious impact of keeping people healthy, a COVID-19 vaccine could end up costing individuals and the U.S. government less in the long run. This would be determined by comparing the costs associated with mass vaccine distribution (production of vaccine plus the infrastructure to widely distribute) against the costs associated with caring for infected individuals (unemployment benefits and healthcare costs). On an individual level, again the comparison comes between the cost to receive a vaccine (which may be covered entirely by your insurance) against the costs of becoming infected and symptomatic (loss of work, hospitalization, etc.).
Of course, in the context of the economy at large, less money spent on the treatment of people affected both directly and indirectly by the virus means the more money individuals and governments are able to spend elsewhere - thus an indication that a preventative measure for the virus could be a contributing factor in the growth of the country’s economy.
Will There Be a Global Post-Pandemic Spending Spree?
For millions around the world, the past 10 months have been fatiguing and isolating. We’ve canceled large celebrations, skipped small gatherings with loved ones and spent holidays apart. Many of us have opted to postpone vacation plans as we stay close to home. With this potential light at the end of the tunnel, who could really blame citizens around the world for wanting to celebrate?
Does this mean that when life resumes to some sort of post-pandemic “normal” - should we expect to see an economic jump? More spending, more traveling, more vacations - all means more money going back into the economy. While it’s impossible to predict if people will be big spenders once the pandemic has ended, it’s definitely something worth considering and looking out for in the coming months.
What does this mean for the economy in the coming months, and even years? A vaccine allows us to eventually resume work, travel freely and patronize businesses - all factors that can potentially contribute to a growing and progressing economy.
Throughout this year and in the coming years we will continue to bring you our perspective on how the economy will recover through our Quarterly Economic Updates. Be sure to follow us on social media to be informed on when these events will be available to you.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.