COVID-19 cases in the US are blazing out of control, and potential shutdowns in targeted places are going into effect to ease the spread of the virus. The United States reported more than 4 million coronavirus cases in November, which is more than any country has reported all year except India and Brazil. The spread is so rapid that public health experts U.S. will keep seeing record-breaking numbers in the final month of 2020.
Unfortunately, the spread of the virus was political. For whatever reason, the lame-duck President of the United States Donald Trump decided to tell people that a mask was not necessary to wear, and the end of the virus was around the corner. Each day the President denied the spread of the virus, the outbreak expanding. Since the pandemic began, the U.S. has seen more than 13.3 million confirmed cases and over 267,000 deaths, according to data from Johns Hopkins University. The U.S. accounts for nearly 20% of the global death toll.
The U.S. saw a rebound in economic activity in the Q3, with GDP rising 33.1% after declining by nearly the same amount in the Q2. U.S. retail sales increased less than expected in October and could continue to slow as the spiraling of Covid-19 infections are eroding household income. Retail sales rose 0.3% last in October according to the Commerce Department less than the 0.5% expected in October. Additionally, the spread of the virus has significantly reduced consumer sentiment. According to the Conference Board, the Consumer Sentiment Index stood at 76.9 in November 2020, down from 81.8 droppings to the lowest number since August. If the spread of the virus continues to accelerate, the negative sentiment will erode consumer confidence and spill over into consumer spending during the holiday season. This will hamper economic growth and could contract GDP.
In late November, Pfizer and Moderna, two pharma companies, announced the results of their phase-3 vaccine trials. Both reported astonishing results. Pfizer announced that with more than 44,000 people tested in the phase-3 trial of their vaccine they saw 95% efficacy. If this does come about it would essentially eradicate the virus from the planet. The Moderna results were very similar, which has buoyed online trading of the share price. Both companies have now requested approval from the US Food and Drug Administration.
On December 2, 2020, the United Kingdom has become the first Western nation to authorize a Covid-19 vaccine, and the first doses to be rolled out across the country in the second week of December. The UK has ordered 40 million doses of the vaccine which is enough to vaccinate 20 million people. Elderly people in care homes, and front line health workers along with other vulnerable people will be top of the priority list to receive the vaccine. On the same day, the US CDC said that healthcare front line workers will be the first to receive the vaccine in the United States.
The news that a vaccine is on the way has helped lift sentiment but, it will take a while before the vaccine can permeate through the United States. While Pfizer says they will be able to produce 100-million doses of the vaccine per month in 2021, each person needs two doses to be inoculated. There are approximately 24-million healthcare workers in the United States. After front line healthcare workers receive shots, and the elderly, children, and adults will be next on the list. It could easily take until the summer before many begin to receive vaccinations. The question is whether this will be too late? Adults between the ages of 25 and 55 are the driving forces behind economic growth and they will need the vaccine to be able to completely go back to work.
The spread of the virus in the United States is blazing out of control. The number of new cases and new hospitalization continues to hit fresh highs each day. Sentiment declining job opportunities continue to be sliding. There are new lockdowns in place in targeted areas around the country. While many are convinced that the cavalry is on the way in the form of a vaccine. It will take a while for most of the country to become vaccinated. Pfizer and Moderna have applied for FDA approval which will likely occur in December following the UK’s historic approval in early December. The question is whether the vaccine will come soon enough to stem the tide of economic contraction.