Immunizing the majority of the population is one key to stopping the spread of COVID-19 and protecting our community's most vulnerable members. For months we waited and now we have developed and are currently distributing a COVID-19 vaccine.
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, families face eviction and governments have scrambled for months to offer assistance.
With multiple viable vaccine trials indicating mass availability is coming sooner than later, what should we expect in regards to the economy? Will we skyrocket to pre-pandemic levels quickly? Or will things continue to rise and fall as unpredictably as they did through most of 2020? No one knows for sure, of course, but here are some factors we're looking into 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 here in the US, the 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.
With a second vaccine, developed by Moderna, rolling out now as well, more Americans will have access to the vaccine in the coming months.
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 locations.
- 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 economy by staying healthy, working, and spending money.
What we saw in 2020, was awful for much of the economy. The virus running rampant had a powerful rippling effect - governments (rightly or wrongly) calling for widespread shutdowns, people unable to work, people therefore unable to spend, travel and entertainment screeching to a halt, and ultimately a very weak economy as a result.
Prevention Vs. Treatment
They say, “An ounce of prevention is worth a pound of cure.” When it comes to the economic impact of a pandemic, the costs associated with prevention (a vaccine) will likely be less than the costs associated with treatment.
Aside from the obvious impact of keeping people healthy, a COVID-19 vaccine could end up saving individuals and the U.S. government money in the long run. This would be determined by comparing the costs associated with mass vaccine distribution against the costs associated with caring for infected individuals over time. On an individual level, again the comparison comes between the cost to receive a vaccine (which likely will be covered by your insurance) against the costs of becoming infected and symptomatic (loss of work, hospitalization, etc.).
Less money spent on the treatment of people affected by the virus means more money individuals and governments are able to spend elsewhere - which could be a large contributing factor in the growth of the economy.
Will There Be a Global Post-Pandemic Spending Spree?
For millions around the world, the past 10 months have been exhausting and isolating. We’ve canceled large celebrations, skipped gatherings with loved ones and spent holidays apart. Many of us have opted to postpone vacation plans as we stay closer 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, we should 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 is under control, it’s something worth considering and looking for in the coming months.
In decades past, we’ve developed vaccines to help eradicate diseases such as Mumps, Polio, Influenza, Measles, and Whooping Cough. With the development and distribution of the new COVID-19 vaccine on the horizon, people around the world could finally see an end to the pandemic. What does this mean for the economy in the coming months and years? This will allow us to return to work, travel freely, and patronize businesses - all factors that contribute to a growing and progressing economy.
This content is developed from sources believed to be providing accurate information. 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 financial advice.