In a widely expected move, the Federal Drug Administration (FDA) has granted Emergency Use Authorization to Pfizer’s Covid-19 vaccine.
The approval comes after the FDA’s advisory panel made a recommendation to authorize the vaccine on Thursday and almost 11 months after a national public health emergency was declared in the United States. The nation has severely struggled with Covid-19 since then, with over 15 million confirmed cases and over 294,000 deaths, according to the most recent data. The U.S. economy has also endured considerable damage and slipped into a recession; as many as 20.5 million Americans lost their jobs during the peak of the first wave in April.
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The FDA’s approval today brings hope that the country and the world can slowly make their way to recovery.
The vaccine, developed by Pfizer and its German partner, BioNTech SE, is a two-dose regime that is 95% effective against Covid-19. There are no major safety issues related to the vaccine. The United Kingdom was the first country in the world to approve Pfizer’s vaccine for use, and started delivering doses on December 8.
Nearly 6.4 million vaccine doses could be given in mid-December, according to the Washington Post. Here’s what you can expect as the country becomes vaccinated against Covid-19.
Could a Vaccine End the K-shaped Recovery?
When the pandemic began, the Trump administration was insistent that the economy would endure a V-shaped recovery, characterized by a steep decline followed by a rapid rebound. Now, it appears that the economy is experiencing a K-shaped recovery.
A K-shaped recovery is defined by the two very different economic realities experienced by Americans. Well-educated, white-collar employees who can work from home are prospering—that’s the upper arm of the K, where the economic recovery is headed upwards. Meanwhile, the lower arm of the K represents the lower-wage, working-class Americans employed by businesses in severely impacted industries like tourism and hospitality—they are on the lower arm of the K, where there is no recovery to speak of.
The Brookings Institute, a nonprofit public policy think tank, notes that as consumer preferences and spending patterns have changed, online-centric occupations are creating new job opportunities. However, Brookings points out that low-wage workers who account for most of the Covid-19 job losses will struggle to get back on their feet.
“… Few unemployed workers have the time or resources to reskill and find new work on their own. If these shifts continue, many low-wage workers may see less demand for their labor in the long run—meaning lower wages and decreasing job quality for those who can find work, and long-term unemployment for those who can’t,” writes the Brookings Institute.
In October, the Wall Street Journal reported that the economy’s path could shift away from a K-shaped recovery in future months. But the economic damage from the lower arm of the K—reduced consumer spending, increased evictions and debt defaults—could put a damper on consumer demand and slow economic growth.
The damage is already starting to snowball. Nearly 12 million renters will owe an average of $5,850 in back rent and utilities by January, according to analysis by Moody’s Analytics. Twelve million unemployed Americans could lose their unemployment benefits by the end of this month if Congress fails to pass another Covid-19 relief bill—something Republicans and Democrats still can’t agree upon.
Would a Vaccine Aid the Job Market?
The job market has rebounded since the peak of the pandemic, but not entirely. About 56% of jobs lost in the spring have been replaced—meaning 9.8 million jobs, equal to the peak of losses during the Great Recession, have not been recovered.
Permanent layoffs as a result of the Covid recession are now up to 3.7 million.
The service sector, for example, is being hit particularly hard by the pandemic due to social distancing mandates across the country. About 17% of America’s restaurants have permanently closed, and nearly 10,000 more could close within the next three weeks, according to CNN. Sales and construction jobs have also seen dramatic decreases. As these jobs continue to disappear, individuals in the service industry could find it difficult to find work as the pandemic begins to recede.
Many Americans have pinned their hopes on a Covid-19 vaccine to greatly reduce unemployment. But don’t expect the job market to quickly rebound once the virus is under control.
In June, the Brookings Institute estimated that 42% of the jobs already lost due to Covid-19 are “gone for good.” It cites consumer, worker and business responses will continue long after the pandemic is over; for example, reduced business travel and more online shopping will change travel and retail industries.
It’s also important to note that past recessions have taken a significant chunk out of the lower percentile’s net worth.
The Great Recession cost the bottom 50% of households as much as 42% of their networth during the downturn, according to the St. Louis Federal Reserve Bank. It took the bottom 50% nearly a decade to return to their pre-recession wealth.
Now, the unprecedented Covid-19 recession, and resulting K-shape recovery, threatens their financials yet again, and it remains unclear how long it will take for them to recover.
Would a Vaccine Revive Consumer Spending?
Consumer spending fluctuates with the health of the economy. During a recession, consumers generally reel in their spending on food away from home, new cars and durable goods, like appliances, according to an article from the Bureau of Labor Statistics.
Americans’ purchasing confidence is still at a low point, according to the latest Forbes Advisor-Ipsos U.S. Consumer Confidence Weekly Tracker. Overall consumer confidence is at 49.8 points, and Americans earning under $50,000 have the lowest confidence of all income levels. A majority of Americans are also holding off on making big purchases like a home or car, even as the economy’s conditions have slowly improved since the spring.
Discretionary spending on things like dining, entertainment and travel typically goes up after a recession ends, but what comes next in a post-Covid world remains to be seen.
According to Deloitte, “whether households get back to their old spending habits, and how fast, will however depend much on how they emerge—economically and emotionally—from this unprecedented crisis.”
If the K-shaped economic recovery continues, wealthy Americans with consistent employment may be the first to increase spending as the vaccine is implemented in the U.S..
Details on Vaccine Distribution
The most vulnerable populations are slated to receive the first U.S. doses of Pfizer’s vaccine. That includes health care workers, and residents and staff of nursing homes and other long-term-care facilities. The next phases of vaccine distribution would include essential workers and older adults, and eventually the rest of the population.
President-elect Joe Biden recently said he wants 100 million shots of the Covid-19 vaccine to be distributed during the first 100 days of his presidency.
It’s important to note that widespread vaccine distribution won’t happen overnight, and that means life won’t return to what we used to consider as “normal” (as in, no masks, travel restrictions or quarantine requirements) quickly. Americans are leery of the vaccine; a December YouGov survey of 10,838 U.S. adults found that 33% of respondents wanted to wait to get the vaccine until others in their community got it first. Eighteen percent don’t plan to ever get the vaccine.
Dr. Anthony Fauci, the top infectious disease expert in the U.S., says things will return to a “relative normal” during the second and third quarter of 2021. That heavily relies on a major factor: The majority of Americans will need to take the vaccine. But sanitary measures will still need to be observed while the vaccine rollout takes place, including wearing a mask and practicing social distancing.
Things like international travel will remain up in the air. France, whose borders remain closed to people traveling from the U.S., won’t start a widespread Covid-19 vaccine campaign until April 2021. If countries do let tourists in, they’re likely to continue to require proof of testing negative for Covid-19, like Bermuda and Croatia currently do.
For now, Americans should continue to focus on doing their part to stop the spread of Covid-19.
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