Vaccinating America: An Economic Driver
January 25, 2021
By Samuel Richter
As we look at economic drivers early on in this new year and new presidency, recovery from the COVID-19 pandemic is still at the top of the list. A key factor to keep an eye on now is the vaccination effort.
As shown in the chart below, states across the country have seen an uneven start to the vaccination process. The United States as a whole has now vaccinated over 4% of the population.
We are working toward vaccinating enough of the U.S. population to reach herd immunity, which according to Dr. Anthony Fauci, is roughly 75%. Reaching herd immunity would have a large impact on economic recovery of course, because it would allow the economy to open up. Speeding up the vaccination effort is one of President Biden’s stated goals early in his term — he has laid out a strategy to open 100 federally supported vaccination centers and to administer 100 million vaccines in his first 100 days.
The Vaccine and The Markets
Back in November, my colleague Michelle Holmes wrote a commentary titled “The Vaccine Race and Its Impact on the Markets.” In it, she discussed how positive news on vaccine trials benefitted value-oriented stocks. With the current vaccination effort, we are now starting to reap the benefit as the vaccine trials and headlines turn into reality. This should boost the value-oriented stocks again, as we move toward reaching herd immunity and returning to normal economic conditions.
Service-related industries, along with airlines and cruises, make up a short list of sectors that could see a large benefit from a return to pre-pandemic spending and travel patterns.
As we look forward to an eventual return to “normal,” we will continue to remain prudent. Portfolios under our care will remain well diversified with a slight tilt towards value on the equity side both here and abroad. Contact an advisor today if you would like to review your portfolio.