As the U.S. and the world move beyond the devastating impacts of the pandemic, it is hoped that this will have a positive impact on our economy.
The pandemic became widely publicized in March of 2020. Afterward, the stock market plunged and many sectors of the economy declined or shut down altogether. Many states instituted drastic measures to combat the virus.
Fast forward to today and we saw the stock market recover in the latter part of 2020 with the S&P 500 gaining about 18% for the year. Many major market indexes remain at or near record high levels. We are seeing substantial rollouts of COVID vaccines across the country, though distribution is a bit uneven among various states and segments of the population.
Current Restrictions and Reopening Plans
Current restrictions on activity and plans to reopen the economy vary widely around the country. Texas notably announced an end to their statewide mask mandate. Many states and local areas have begun to open up in terms of capacity limits at restaurants and for other types of gatherings.
Plans for further reopening vary as well, with many areas citing the need to meet benchmarks in terms of COVID hospitalization rates, positive tests or other metrics. On the flip side of this, some experts have urged caution saying even with the expansion of vaccine distribution, we are not out of the woods yet and could see a spike in cases.
Vaccine Supplies and Distribution
The Biden administration has pledged to greatly increase the supply of vaccines to the state and has set aggressive targets for the number of doses given. As of late March, about 130 million doses of the various versions of the vaccine have been administered. The total population of the U.S. is about 331 million.
A number of states have expanded the group of individuals eligible to receive the vaccine from those who are age 65 and over plus essential workers, which was the criteria in most states at the beginning of the process.
Many analysts tie any rebound in the economy to the ability of the U.S. and the rest of the world to beat the pandemic. Getting not only our citizens vaccinated, but getting the vaccine distributed and administered globally has been cited by President Biden as a key priority.
The Spanish Flu and the Economy
According to data cited by the National Bureau of Economic Research, the Spanish Flu pandemic of 1918 resulted in a 1.5% decline in the U.S. GDP and a 2.1% decline in overall consumption. This is lower than researcher’s estimates of a 6% decline in GDP and 8% decline in consumption in the typical country over the same time frame. These global numbers are in line with what occurred here in the U.S. during the Great Recession of 2008-09.
While our economy is vastly different than it was in 1918 and we don’t have the final economic numbers from the pandemic as of yet, there are some forecasts that show some dire numbers. The IMF forecasts that when the numbers for 2020 are tallied, on average the GDP for developed nations around the world will have fallen by 4.7% with emerging markets countries declining by over 8%. China is an exception here, with their economy expected to show growth.
There have been some dramatic effects on U.S. businesses. For example, ticket sales in movie theaters were about $100 million for the first weekend in March of 2020, considered normal. The following weekend they had declined by 50% and had effectively evaporated by April of 2020. It remains to be seen if this industry can fully reopen and recover.
Industries like travel and restaurants have been ravaged. Both are just starting to come back. On the other hand, so-called stay-at-home businesses have prospered. Amazon, Zoom and other companies of this ilk have prospered.
Beyond this, the stock market certainly has staged a recovery from its lows in early to mid-2020 to finish the year on a strong note. Those increases have carried over into 2021, though in some cases the companies and industries leading the markets have.
Where the economy goes from here remains to be seen, but there is much hope for positive growth as more and more Americans become vaccinated and life returns to a more normal state.