While the number of COVID-19 cases in the US remains high, the rate of infection has dropped significantly, providing hope that the worst of the pandemic may well be behind us and that the US economic recovery will pick up speed as the year unfolds.
Since reaching a peak in January following the holidays, new COVID-19 cases have plunged dramatically. According to the World Health Organization (WHO), the US had just over 470,000 new COVID-19 cases over the week ending February 28th. That is the fewest number of new cases in a week since late October and represents a 70% decline from the peak in January1.
While the plunge in cases is multi-faceted and complex2, the surge in vaccine administration is likely the most significant driver of the decline. (Figure 1 shows the significant ramp up in vaccine administration and the subsequent decline in new cases.)
Figure 1: US COVID-19 New Cases and Vaccines (7-day moving average)
Source: WHO, Johns Hopkins, QMA Calculations. As of 2/28/2021.
According to data from Johns Hopkins, as of February 28th, more than 72 million vaccines have been administered in the US, at a pace of roughly 1.7 million per day. The 18.8% of the adult population that has received one or more doses of the vaccine, combined with others who have recovered from the disease and acquired immunity, has significantly reduced the number of hosts available.
Moreover, according to analysis by Bloomberg3, the number of vaccines delivered should increase to “almost 20 million a week in March, more than 25 million a week in April and May, and over 30 million a week in June. By summer, it would be enough to give 4.5 million shots a day.” Also helping to get more vaccines in arms is Pfizer’s recent decision to ask the US Food and Drug Administration for permission to store vaccines at higher temperatures4, which will reduce the logistical difficulties in delivering the vaccine.
As more and more people are vaccinated, the number of new cases should continue to fall.
Already fewer people are dying from the disease. The WHO reports less than 15,000 people died from COVID-19 in the week ending February 28th. This is down more than 35% from the peak in January5.
Figure 2: US COVID-19 New Cases and Deaths (7-day moving average)
Source: WHO, QMA Calculations. As of 2/28/2021.
This trend is likely to accelerate due to the lag between falling cases and the number of deaths. The US FDA’s emergency use authorization of the Johnson & Johnson vaccine6 will help diversify vaccine supply, while prioritizing vaccine administration for the elderly7 and those with health issues is also likely to reduce the death rate. In addition, the lower case counts should free doctors to focus on more serious cases.
Thus, current trends in vaccine administration, cases, and deaths suggest that the worst is behind us.
Absent new shocks, the populations most at risk should be vaccinated (if they want) by March with the bulk of the US population vaccinated by the summer. Lockdowns and other governmental restrictions will either be re-evaluated or eliminated in response, opening up the economy significantly and paving the way for strong GDP growth in the second half of 2021, particularly from the services sector, which had been hit harder by lockdowns and restrictions than manufacturing.
Of course, new strains from the UK, South Africa, and Brazil that more easily spread the disease pose some risks to the outlook. The Pfizer and Moderna vaccines provide some protection against the UK strain but are less effective against the South African strain. Pharmaceutical companies are developing booster shots to protect against the new strains. While faster delivery of the original vaccines may be enough to limit the spread of the new strains in the US and other developed markets, lower-income countries with limited access to the vaccines may continue to see new COVID-19 infections for some time, providing a breeding ground for new strains and potentially necessitating regular, or even seasonal, booster shots against the latest COVID-19 strain.
1 Over 1,780,000 in the seven days ending January 13th.
2 Thompson, D. (2021, Feb. 17). COVID-19 Cases Are Dropping Fast. Why?. Retrieved from https://www.theatlantic.com/ideas/archive/2021/02/why-covid-19-cases-are-falling-so-fast/618041/.
3 Armstrong, D. & Randall, T. (2021, Feb. 2021). A U.S. Vaccine Surge Is Coming, With Millions of Doses Promised. Retrieved from https://www.bloomberg.com/news/articles/2021-02-18/how-many-vaccine-doses-are-available-u-s-should-see-a-surge.
4 Lovelace, Jr., B. (2021, Feb. 19). Pfizer asks FDA to approve storing Covid vaccine doses at higher temperatures. Retrieved from https://www.cnbc.com/2021/02/19/covid-vaccine-pfizer-asks-fda-to-approve-storing-doses-at-higher-temperatures.html.
5 Over 23,000 in the seven days ending January 28th.
6 U.S Food & Drug Administration (2021, Feb. 27). FDA Issues Emergency Use Authorization for Third COVID-19 Vaccine. Retrieved from https://www.fda.gov/news-events/press-announcements/fda-issues-emergency-use-authorization-third-covid-19-vaccine.
7 According to the CDC, nearly 55% of vaccines administered have gone to those over 65. Retrieved February 22, 2021 from https://covid.cdc.gov/covid-data-tracker/#vaccination-demographic.